Category: Blog

How Much Life Insurance is Enough?

We have had five physicians under the age of 55 pass away in the past 12-18 months. Each owned what they thought was enough life insurance. Often, I’m asked how much life insurance is enough. Do you own enough life insurance? Clients buy life insurance for many reasons, to replace income, provide for dependents, to pay off tax liabilities, as a retirement and estate planning tool.  To answer the question of how much is enough, let’s first focus on the…

Income Splitting for Incorporated Professionals – Summary

On June 25th 2018 the government passed Bill C-74. This legislation brings new rules on income splitting and limits access to the small business deduction where passive investment income exceeds $50,000 a year. Below is a summary on the proposed income splitting tax rules (TOSI rules) for illustration and discussion purposes. For most incorporated physicians, there are two parts to what they refer to as “income”; salary and dividends. Salary. The general rule is the salary you pay an employee…

What Happens to Your Medicine Professional Corporation When You Retire?

As Physicians start to plan for retirement many ask what happens to their corporation and the assets they have accumulated inside the corporation when they retire. Below is an overview on some ideas for consideration. A corporation is a separate legal entity from you the physician and is owned by the shareholders.  The corporations’ articles of incorporation established the existence of the corporation, the shareholders’ class of shares (for example A, B, C), voting rights, share value and the different rights…

New Tax Rules: Advanced Planning to reduce tax

On June 25th the Liberal government quietly passed Bill C-74. This legislation brings new rules on income splitting and limits access to the small business deduction where passive investment income exceeds $50,000 a year. Below is a summary, the impact and advanced planning solutions. The small business tax rate is 13.5% on the first $500,000 of active business income and 26.5% thereafter. Income from passive investments is taxed at 50.17%. Under Bill C-74, income subject to the small business tax rate…

Estate Planning 102

What happens to your assets when you pass away? Rick is a retired Physician. He and his wife Janet are both Canadian and they have three children. He is incorporated and has built up savings of $3,000,000 in his corporation which includes the cash value of his life insurance. They have RSPs of $2,000,000 and they own their home which is worth $2,500,000 and have no debt. Their children are grown up and they have five grandchildren. Their Wills and…

Life Insurance for Physicians

There are two things that are certain in life, death and taxes so plan accordingly. Physicians buy life insurance for many reasons, to replace income, to provide for their dependents, to pay off tax liabilities, as a tax preferred asset class or as a retirement and estate planning tool. What are the different types of life insurance? There are two types of life insurance; term and permanent. Term insurance is temporary in nature and has no cash value. This is…

Long Term Care Insurance for Physicians

Concerned about the cost of your health care during retirement? According to Munich Reinsurance, 50% of men and 63% of women age 65 will require some type of long term care assistance during their lifetime. Long term care insurance protects you against medical illnesses and the financial impact that prolonged medical attention may have on your ability to conduct your daily activities and the associated financial consequences. In the event of a cognitive impairment or the inability to complete two…

YES, You Need A Will!

YES you need a will! As a Physician, you have spent the better part of your life building up assets and providing for your family. All too often people don’t think about what happens when they pass away and how to plan. There are two parts of estate planning. First, you need a Will. Second, you need to understand what happens to your assets when you pass away and how can you plan to reduce tax. This article discusses the…

Critical Illness Insurance for Physicians

You’re a doctor, so you should know these facts… One out of three Canadians will suffer a critical illness during their lifetime Cancer: 40% of men and 35% of women develop cancer in their lifetime Heart disease:  50% of men and 30% of women suffer from heart disease during their lifetime Stroke: 75% of stroke victims admitted to hospital survive What is critical illness insurance? Critical illness insurance is designed to create a tax-free lump sum payment of up to…

Estate Planning 101

As a Physician, you’ve spent the better part of your life building up assets and providing for your family. All too often people don’t think about what happens when they pass away and how to plan. There are two parts of estate planning. First, you need a Will. Second, you need to understand what happens to your assets when you pass away and how can you can plan to reduce the tax burden. A WILL Your Will is your final…