Are your investments in step with your evolving life?...that your investment strategy reflects your personal goals and ideals. Are your investments in step with your evolving life?

FALL 2012

Hart Shapiro, CMA, CFP Senior Financial Planning Advisor Assante Financial Management Ltd. 1345 Taylor Avenue Winnipeg,MB R3M 3Y9 Telephone: (204) 977-8073 Fax: (204) 943-1561 E-mail: [email protected] Website: http://www.hartshapiro.com

It’s amazing how quickly time passes.

Already, it’s the fall of 2012 — the

Olympics are over for another four years, the

kids are heading back to school,

and you’re getting closer to retirement every

day.

Time is precious. By choosing Assante to

help you arrange and manage your financial

life, you can free up your time for more

important things while still feeling confident

that your investment strategy reflects your

personal goals and ideals.

Are your investments in step with your evolving life?

When your life situation or goals change, your portfolio may need to change too. Here are

three illustrations of how we might adjust your portfolio as your life changes.

Scenario 1: You’re a couple with new short-term goals. When you begin to build a life with a partner, you may be able to invest aggressively with a focus on growth (equities) to build your assets. After 10 years, however, your life may be very different. Your focus may shift to shorter-term priorities, such as starting a new business in the next few years or saving for a new car. In this scenario, a more conservative portfolio, with a greater weighting of guaranteed and fixed-income products, can help you meet your needs.

Scenario 2: You’re a single parent who receives an inheritance. As a single parent of a school-age child, you need security, and

that means a conservative portfolio. But if you should receive a sizable inheritance, your future could be more secure, allowing you to take a less conservative, more growth-oriented stance in your portfolio.

Scenario 3: Your estate planning goals have changed. Upon retiring, you and your spouse designate a portion of your investments as an inheritance for your two children. You invest conservatively to safeguard the legacy. Now that your children are well established, you think it would make more sense to leave your money to your grandchildren. This change extends your time horizon, enabling you to focus on potential growth.

Any major change in your life may call for an adjustment to your investment strategy. Talk to us when changes occur, and we’ll make certain your investments reflect your evolving needs. n

2

EstAtE PLAnning

Once you start planning your estate, you’ll likely hear about ways to avoid

probate by passing assets outside of your will. Probate is the legal process of confirming that a will is valid (generally not required in Quebec).

Saving money on probate isn’t the only reason some people want to bypass their will. It can also allow for faster distribution of assets and protect your privacy. However, there can also be disadvantages. Here are four main strategies for avoiding probate, along with drawbacks to consider.

gifting assetsSimply gifting assets to family members is a viable strategy if you genuinely aim to help them now, and you won’t need the funds. Otherwise, consider the downside:

• You lose control of the assets and may not approve of the way the assets are managed.

• If your child suffers financial or marital difficulties, the gift may go to

Problems may occur when there’s more than one heir. For example, suppose you name your daughter as beneficiary of a registered plan and leave non-registered funds to your son in your will. Your daughter will receive her funds outright, while the associated tax burden will fall on the estate and be paid from your son’s inheritance.

sharing ownershipYou and your child can jointly own investment accounts, real estate, or other non-registered assets through a joint account with right of survivorship (not available in Quebec). Upon death, the assets

roll out automatically to the survivor. This strategy bypasses the will, but consider the drawbacks:

• You may lose control of the asset.• You risk conflicts with your child over

decisions regarding the asset. • Your child’s share is vulnerable if

pursued by creditors or an ex-spouse.

Establishing a trustYou can set up a living trust that holds assets during your lifetime and distributes them outside your will upon your death. It can be worthwhile for investment planning, estate freezes, caring for a child with special needs, or charitable giving.

For avoiding probate alone, consider what you’re up against:

• Upon the transfer, you’ll pay tax on accrued capital gains on the asset.

• Income in the trust is taxed annually at the highest marginal rate.

• Costs of establishing the trust and annual compliance may be greater than the probate fees.

Estate planning can be complex, and the laws differ from one province to another. Talk to us about your goals, including whether or not to avoid probate, and we’ll help you determine the best course of action. n

Probate across the nationProbate fees vary by province and territory, with different combinations of graduated scales, flat and maximum fees, and percentages of estate value, as this table shows.

Probate fees or tax on a $700,000 estateB.C. $9,458

Alberta $400 (maximum)

Saskatchewan $4,900

Manitoba $4,900

Ontario $10,000

Quebec No probate on notarial wills

New Brunswick $3,500

P.E.I. $2,800

Nova Scotia $10,238

Nfld. and Labrador $3,555

Yukon $140 (flat fee)

NWT/Nunavut $400 (maximum)

Warning: Avoiding probate may cost more than it saves

creditors or a former spouse. • The gift is treated as a deemed

disposition, and triggers tax on capital gains.

Designating a beneficiaryAssets pass outside your estate when you name beneficiaries in a registered plan, life insurance policy, or segregated fund.

3

REtiREmEnt PLAnning

Marjorie, 68, works full-time as an ultrasound technologist. Omar, 70, practises as a labour

relations professional, and operates part-time as a consultant. Robert and Hana, a married couple in their mid-60s, recently opened a shop selling green products for health and home.

These illustrations speak of a growing movement of people who have chosen to work past the traditional retirement age. According to a 2011 Harris/Decima poll, 73% of Canadians aged 55 to 64 believe they will work during their retirement years.

Why do they work? The modern economy plays a key role, as lower interest rates make it more difficult to establish a steady stream of secure income. Also, Canadians are living longer and require more retirement income. Another reason is that today’s seniors are healthier, more youthful and energetic. The right kind of work can be enjoyable, even exhilarating.

Behind the trendIn the “new retirement,” there is a multitude of reasons people choose to work in their 60s, 70s, and beyond.

Financial goals. You may keep on working simply because you need more time than initially planned to achieve your financial objective for retirement. Some people do meet their original goal, but continue working or re-enter the workplace because their retirement plans change — perhaps, because they’ve decided to travel the world or purchase property in another country.

Psychological and social reasons. Some retirees discover they were happier when working. They miss the energy of the workplace and are more content with a healthy work-life balance than simply leading a life of leisure. They may also miss the social interaction they enjoyed with friends in the workplace.

Cognitive health. There is a growing belief that mental exercise helps maintain cognitive function. Whether for this reason or because you miss the mental stimulation, you may want to keep

sharp by returning to your career or beginning a new venture.

Personal factors. There are countless personal reasons why people choose to work during retirement. A business owner may decide to keep the company operating successfully before handing the operation to a son or daughter. Another individual may launch a business for the first time to realize a lifelong dream.

You may want to continue your career because it’s an integral part of your identity. That reason might be behind this revealing statistic from the Canadian Institute for Health Information — a third of physicians in Canada who are 65 or older still work full-time.

We’re here to helpIn this stage of life, financial planning is different from pre-retirement. We can provide assistance in a variety of areas. For example, we can help coordinate your employment income with your retirement savings so as to minimize taxation and maximize your entitlement to government programs such as Old Age Security.

Talk to us about the many ways we can help. We want to assist you in setting and achieving your financial goals during your retirement years. n

the new retirement is working

top 10 reasons for returning to work

1. Like working/being active 52%

2. Financial considerations 52%

3. Interesting work opportunity 30%

4. Do not like retirement 29%

5. Want challenge 25%

6. Want to make contribution 13%

7. Prefer gradual retirement 8%

8. Improvement in health 5%

9. Caregiving duties no longer required 2%

10. Other 5%

Source: Statistics Canada, Canadian Community Health Survey (CCHS) – Health Aging, 2009

This material was prepared for and published on behalf of the representative named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither Assante Financial Management Ltd. or Assante Capital Management Ltd. nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trade-marks or service marks (“Trade-marks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trade-marks herein does not imply any licence has been granted to any third party. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2012 Assante Wealth Management (Canada) Ltd. All rights reserved.

Turn investment losses into tax savings

No one likes an investment that loses money. The good news, though, is that you can turn the loss into tax savings.

Tax-loss selling involves selling a non-registered asset that’s worth less than its original cost and using the capital loss to offset capital gains. This strategy can even help you recoup capital gains tax paid in previous years.

The rulesYou must first apply the capital loss against any capital gains from the same tax year. Remaining losses can be used to offset capital gains from the previous three years or carried forward for use in future years.

ExampleLet’s say you sold an investment early in 2012 and realized a $15,000 profit. At the end of the year, you have another investment that’s in a $7,000 loss position. Selling that investment will realize the loss, which then partly offsets your $15,000 capital gain. You’re left with a net capital gain of $8,000, only half of which is taxable.

Take noteIf you sell a security and use the capital loss, you cannot repurchase that same security for at least 30 days. Otherwise, it will be deemed a superficial loss that cannot be applied against capital gains.

If you decide to use a capital loss on your 2012 income tax return, the investment must be sold and the transaction settled before year-end. Interested? Let’s talk. An asset should be sold for sound investment reasons and not only to gain a tax advantage. n

Tax planning is a key part of any investment you make. “How much tax do I pay every year on income

or growth? Can my investment grow tax-deferred? What’s the tax rate when I withdraw the funds?”

Just outside of the traditional lineup of investment products is a financial vehicle with exceptional tax advantages — universal life (UL) insurance. This product consists of two components: life insurance and investments. The insurance is permanent coverage that protects you for your lifetime. The investment component provides you with tax-deferred growth. Ultimately, both the insurance amount and value of your investments can flow out of the policy tax-free.

How it worksWhen you purchase a UL policy, you make a series of deposits, usually monthly or annually. Part of your deposit covers the cost of insurance, and the rest goes into the investment component.

Investment choices vary by provider, but in all cases you can create a portfolio diversified across asset class, geographic region, economic sector, and management style, including a choice of managed, indexed, and guaranteed funds. You can choose a single investment that uses the “fund of funds” or “portfolio” approach, or you can design your own portfolio from hundreds of funds.

Each policy has a minimum and maximum contribution amount. The minimum is the amount required to keep your insurance coverage in force.

The maximum allowable contribution is determined by several factors, including your age, health, and life insurance amount.

UL insurance is known for its flexibility. It offers benefits at any stage of life. For example:

• Someone starting out with a young family could use the policy mainly for insurance coverage.

• Investors in their 40s and older can use universal life primarily for tax-advantaged investing.

• Investors approaching retirement or already retired may choose universal life for estate planning purposes.

UL in your later yearsUniversal life insurance is especially useful for those “of a certain age,” as the saying goes. It can provide you with tax-free cash flow in retirement or enable you to leave a larger legacy for your heirs.

Retirement income. You can borrow against the value of the investment component during retirement. Loans are not considered income and are therefore not subject to tax. (Note, however, that the amount of your insurance coverage will be reduced by the amount of the loan.) The loan and interest can be repaid from the insurance proceeds upon your death.

Leaving a legacy. Upon your death, both the life insurance benefit and accumulated investments are distributed to your heirs, tax-free.

If you’d like to learn more about universal life insurance and how it can help you meet your retirement or estate planning goals, please give us a call. n

Tax-advantaged investing beyond registered plans