Frequently Asked Questions

Estate planning is the creation of a plan that, on your death, distributes your estate (i.e., your net after-tax assets) according to your preferences. It sounds simple but can be challenging – especially for Canadian small business owners. People assume that when they die, their estate will be settled in the way they intended (e.g., “Everything will go to my wife/son/daughter.”). However, wishes are not directions. To ensure your goals are achieved, you need to plan ahead and have various legal documents in place. A skilled estate planner knows the areas to consider, the questions to ask, and what to do with the answers.

Tax optimization is the organization of your affairs in a way that fully and legally uses beneficial aspects of applicable regulations to your advantage.  

Navigating the tax system to make the most of opportunities requires deep knowledge of the regulations and how they interact, as well as extensive analysis and precise recommendations tailored to your unique circumstances.

Life Insurance is a contract (the policy) between the purchaser and a life insurance company that pays a sum of money to a beneficiary on the death of the insured individual. The purchaser and/or the beneficiary can be a living person, or a corporation, trust or other entity.

The price of the policy (the premium) is based on the life expectancy of the insured person, estimated changes in the earning capacity of money over time (i.e., the time value of money), and the amount the life insurance company charges to administer the policy. Premium calculation is complex and involves such variables as life expectancy statistics, future long-term market expectations, and cost forecasts.

In Canada, all life insurance policies are unilaterally controlled by the owner of the policy once it is issued, provided the premium is paid during the term of the contract.

There are two basic types of life insurance:

  1. Permanent insurance, which provides coverage for life.
  2. Term insurance, which provides coverage for a specific period.

Both types of life insurance pay a death benefit if the insured person dies with the policy still in effect.

Life insurance is generally used by the policy owner to provide after-tax cash liquidity to a specified beneficiary on the death of the insured person. The money can help cover funeral costs and outstanding debts and taxes, provide relief for dependants, and effect corporate buy-outs or other sophisticated reorganization strategies that need to be settled when a person dies.

Life insurance is a versatile and powerful product when used appropriately, including as part of an estate plan. Life insurance provides cash precisely when it is needed – on the death of the insured person.

A life insurance policy must be underwritten and put in place by a government-accredited, licenced agent.

As your circumstances evolve and regulations change, it is important to monitor the continued effectiveness of your estate plan.

In addition to his comprehensive wealth transfer services, Harris Jones can review or provide a second opinion on the following:

  • Compensation strategies and structures.
  • Calculation of income tax liabilities.
  • Estate planning choices previously made, including but not limited to the integration of life insurance, critical illness insurance, and disability income replacement insurance (Harris Jones also offers these plans).

Rest assured that Harris Jones will only recommend changes if they’re needed to meet your objectives. Harris can work with your existing advisor(s) to get the best outcome for you.

Need help to create or revise an estate plan? Contact Harris Jones.

Get Started on Your Wealth Transfer Strategy