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Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. When it comes to employer-sponsored pensions there are two types of plans: Defined-Contribution Pension Plans and Defined-Benefit Pension Plans. Both help employees save for retirement, but what is the difference? The Defined-Contribution Pension Plan is exactly what it sounds like. There is a defined amount of your salary that is contributed to the plan every pay period. These plans are primarily funded by the employee (called the participant) with the employer matching contributions up to a certain amount. The contributions are invested at the participant’s discretion in mutual funds, money market funds, annuities, or individual stocks offered by the plan. The most common type of defined-contribution plans are managed by large investment companies like Great West Life, SunLife and Manulife through the companies group benefits. In this case, participants may elect to defer a portion of their gross salary via a pre-tax payroll deduction plan, with the company matching the contribution up to a set limit. With a Defined-Contribution Plan, the employer has no obligation towards the account’s performance and gives no guarantee for how much it will pay out when the participant retires. These plans are easy to administer and are low risk for the employer. The employees must choose their level of risk and select the investments themselves based on what the group provider has to offer. The second type of employer-sponsored pension plan, the Defined-Benefit Pension Plan, provides a specific payment amount in retirement. The amount is usually based on an employee’s salary and how long they have been employed with the company. Employees have little control over the funds, and they do not know how much they are contributing every pay period, but they know how much it is going to pay out when they retire. Defined-benefit plans are largely controlled by the employer who takes on the responsibility of investing the funds. This means that they also take on the risk that their investments will not cover the amount they have committed to their employee once they retire. Defined-benefit plans require complex actuarial projections and insurance for the guarantees, making the cost of administration very high. This is why most companies are opting for defined contribution plans these days where the risk is incurred by the employee. Understanding the difference between these plans is only one piece of the puzzle. The best way to ensure you can make it in retirement is to consult a trusted financial planner that is able to guide you through the journey and give you the right advice at every step.

Cyndy Batchelor, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. With kids heading back to school, let us now look at the withdrawal stage of the RESP. Again, we are referring to Self-Directed Plans – held at banks or investment firms. One question that often comes up is does the withdrawal amount need to equal the cost of the school tuition, books etc. The answer is NO. No one is auditing what the money that is withdrawn is spent on. It can be used for rent, transportation, utilities, tuition, books, or food. Q: How do I get money out of the RESP? A: Once your child has enrolled in post-secondary school (University, College, Trade School), they are entitled to withdraw up to $5000 in EAP – Education Assistance Payments from the RESP in their first semester of full-time school. This portion of the payment is from the grant and growth inside the plan and is taxable to the beneficiary (child). They can also withdraw any amount of PSE – Post Secondary Education Withdrawals from the plan. This portion of the payment is your capital and is not taxable. After the first semester, there are no restrictions on withdrawals for full time studies. Part time studies (Specialty Courses/Programs) are restricted to $2500 per program/semester. Q: What constitutes proof of enrollment? A: A letter from the Registrar of the school, a copy of your child’s timetable with their name, student number, and school name. Q: What if a beneficiary does not pursue post-secondary education? A: There are several options: You can wait – the plan can remain open for 36 years You can choose a new beneficiary – in an individual plan, this can be anyone, but if it is not a sibling under 21, the grants must be repaid. In a family plan, the CESG can be allocated to other family plan members, if over $7200 then excess grant needs to be repaid. You can roll the RESP to your RRSP – the Grants will be returned; the capital can be withdrawn, and the income can be rolled into your RRSP – so long as you have the room to a maximum of $50,000 per contributor. You can withdraw contributions anytime from the plan – however when you do so, the grants will be repaid to the government. You can withdraw earnings and growth – an Accumulated Income Payment. If all beneficiaries have reached the age of 21 and are not attending post-secondary education, and the RESP has been in existence for at least 10 years, you can make an AIP payment – it is taxable at your marginal tax rate plus a 20% penalty tax. You can roll the RESP to an RDSP – if the beneficiary has become disabled, you are able to move the Accumulated income to an RDSP on a tax deferred bases with no 20% penalty.

Cyndy Batchelor, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. As parents, we hope that one day our children will grow up to become contributing members of society. Often, this means contributing through employment. Today, many workplaces require education beyond high school. Just like our children, this education can come in many forms. Employers look for specific education such as a University Degree, a College Diploma, a Trade School Certification, or specific specialty courses. How can a Registered Education Savings Plan (RESP) help you plan for your child or children’s future? Here are the answers to some of the most frequently asked questions regarding RESPs. Q: What is the difference between a Group or Pooled RESP and Self Directed/Bank RESP? A: A Group or Pooled RESP is where all the earnings and grants of all the participants are grouped together set up by birth year – no matter what family. Additionally, investments choices, contribution and withdrawal rules are more restrictive. A Self-Directed or bank RESP is owned by the Subscriber (usually the parent). It can be an individual plan (for one child) or family plan (for multiple siblings), there are no investment restrictions, and contributions can be made at any time within the lifetime RESP maximums ($50,000) and withdrawals can be made for post-secondary education with limited restrictions. As we only deal with Self Directed RESPs, all the following information will be based on a Self-Directed RESP. Q: How much is the RESP Grant? A: The Basic Canada Education Savings Grant (CESG) is 20% up to $500 for one year. You can also receive the grant for one previously missed year. Which means you may get a grant for up to $1000 per year – based on a $5000 contribution. There is also an additional CESG of either 10% or 20% of the first $500 contribution based on your Net Family Income. Additionally, several provinces have other lifetime grants, such as the Canada Learning Bond (CLB), which may be added to your contributions. Q: Should I open an Individual or Family Plan? And what is the difference? A: We normally recommend a family plan. A family plan can have more than one beneficiary (related by blood to the contributor). If you are starting out with your first child, you can start a family plan with one child and simply add more children to the plan as they come along. When it is time to use the funds, if one child does not go to post-secondary school, your other children will have the opportunity to use the grants and income accumulated in the family plan. Please stay tuned for Part 2 of our discussion about RESPs. In the meantime, if you have questions, connect with us!

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Time for that annual dental visit or in need of a massage after sitting at the kitchen table for sixteen months? For those lucky enough to have group health benefits these visits are standard but for those with no coverage the costs may seem prohibitive. Personally owned health benefits packages can provide access to prescription drugs, dental, vision, paramedicals (think: massage therapist, chiropractor, dietician, psychologist etc.) and more with a regular monthly premium. Here are some common questions: I mainly do contract work; what are my options? Individual Health Plans are a great fit for individuals doing contract work to provide ongoing coverage. Build a custom plan to meet your family’s needs and budget. I currently have benefits through work, will those continue through retirement? Always check the details. Many plans end at retirement or become very limited in their scope. Sit with an advisor to identify any gaps in coverage at retirement and pinpoint the coverage you want to maintain. Take advantage of the 30-day grace period when your coverage ends to apply for individual coverage with minimal medical questions. When I turn 65 the Ontario Health Insurance Plan will cover me, right? At 65 OHIP begins covering the cost of about 6,500 prescription drugs. In comparison some health benefit plans cover over 18,000 prescription drugs. OHIP coverage may suffice for drugs, but what about paramedical services, medical supplies and travel insurance? With most individual plans you have the option to drop the drug coverage at age 65, while maintaining access to the rest of the benefits. There are so many options? What plan is right for me? Health benefits cover a variety of needs including prescription drugs, dental care, vision care, paramedical services, ambulance services, health aide care and medical supplies. Coverage can also include travel insurance, hospital accommodations and more. Sit with a trusted advisor to review your current coverage, your priority coverage needs and your budget. Why is it so expensive? Health care is expensive. No one plans to get sick or injured; but it happens. Putting insurance in place provides a safety net in case you need it. A health benefits plan also provides stability of costs, spreading the cost evenly over the year, regardless of when you access the drugs or services. Do I already have coverage? There is never a bad time to review your insurance coverages. Maybe you already have coverage but have not been utilizing it. Take the time to review all your personally owned policies and pull out those dusty group benefits manuals. Still unclear what coverage you have? Come and sit with a Financial Advisor to review the coverages in place and identify any gaps.

Cyndy Batchelor, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. No one plans for unexpected health problems. An illness can throw your financial stability off track. Did you know that not all bills are covered by your provincial health plan? In comparison to the past, many more people survive illnesses like cancer and stroke, however, the path to recovery may be long and may mean that you are not able to work and provide income for your family. One in two people will develop cancer in their lifetime. More than half will survive, and that number increases each year. How can Critical Illness Insurance help you? Q: What is Critical Illness Insurance? A: Critical Illness Insurance is a living benefit policy that will pay out a lump sum one-time payment to the insured/owner of the policy if you are diagnosed with a covered critical condition. Conditions can include heart attack, stroke, life-threatening cancer, MS, Coma, Dementia, and Kidney failure, among others. You can check with your Advisor to determine which illnesses are covered. Q: What can Critical Illness money be used for? A: Anything you want. This means it can be used to cover medical expenses outside the provincial or your health plan coverage, to cover your other everyday costs like mortgage, groceries, or vehicle, to access private out of country medical treatment, to supplement your lost wages and even cover your business operating costs if you are self-employed. You can also use it to take a family vacation to reconnect with your loved ones. Q: What else does my Critical Illness Policy Include? A: Access to Best DoctorsR. This is a network of world-renowned medical experts who can give expert opinions and find the right diagnosis and treatment information. This expert advice can be used anytime in your life for yourself, dependent children, parents and parents-in-law. Q: What if I do not make a claim on my policy? A: If you add the return of premium option when you commence your policy, and are not diagnosed with a critical illness, when your policy matures, you can get back up to 100% of your premiums. Contact your advisor today to find out more about Critical Illness Insurance and how it can protect your income and your savings.

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Grab your favourite cup of tea or coffee and let us build your back to work wardrobe. As more and more of the general population gets vaccinated, we are slowly seeing workplaces re-open. For many, this means transitioning from a video-call wardrobe to full office attire. Whether your clothes are now out of style or no longer fit due to additional covid weight gain, it is likely time to head to the stores and overhaul your wardrobe. Here are five things to consider when selecting your wardrobe. Classics – What pieces can you buy that will last several years versus one fashion season? Classic blue or black dress pants can become a staple in your closet. Use coloured tops, ties, or jewellery to change the look. Invest in quality pieces that will last. Budget – this word comes with all sorts of negative connotations, so instead of budget think of it as a goal. Your goal can be to create three outfits for under a specific amount. Alterations – have you considered altering older pieces? Tapering pants, fitting jackets, or dress shirts can be an affordable way to update your current wardrobe. Second hand – if you cringe at the idea of second hand, think of it as vintage. North Grenville has some fantastic second-hand stores. Go in with an open mind, and you may find a few quality pieces that you adore. Shop Local – save a trip to Ottawa and access the stores we have in North Grenville. Whether you are looking for clothing, footwear, or jewellery, North Grenville has several options. For families with young children or teenagers, many of these same tips will apply to back-to-school shopping. For classics think of essentials like back packs that can last several school years. For budget consider setting your kids loose at local stores with some cash and setting expectations on what parts of the wardrobe they need to fill. Youth can create individual styles with vintage pieces. For young kids, take advantage of hand me downs and use a rolling budget so that you add pieces throughout the year as your children grow. Need more tips on budgeting or investing? Please reach out for a full financial review.

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Estate planning can be a beautiful thing. It can create a legacy through gifting to loved ones or charity. Behind your estate goals, there are certain logistics to consider. Here are some common questions: What happens to my investments when I die? Registered Retirement Savings Plans (RRSPs) or Registered Retirement Income Funds (RRIFs) are investment accounts that grow on a tax deferred basis. When you pass away, the remaining balance in your RRSPs and RRIFs are added to your final tax return and are fully taxable. If you have a spouse – your assets can roll tax deferred to your spouse, but the remaining balances will become taxable upon their passing. A Tax-Free Savings Account (TFSA) is an investment vehicle that grows tax-free during your lifetime and rolls, tax-free to your spouse or named beneficiaries upon your passing. Non-Registered Accounts are taxed on an ongoing basis as interest income, dividends and realized taxable capital gains. On the date of your passing there is a deemed disposition of the investment at fair market value. This triggers the remaining capital gains in the account which will be included on your final tax return. The account will also be subject to probate – unless it is held as a segregated fund with named beneficiaries. What about my cottage or rental property? Cottages and rental properties may trigger capital gains at your passing. The assets, if owned personally, will run through probate. Is your goal to keep the cottage in the family? Consider using investments or an insurance policy to cover any future tax liabilities. What will probate cost? In 2021, assets that go through probate in Ontario are subject to probate fees of 0% on the first $50,000 of assets and 1.5% on any additional assets. If you have business assets you should consider setting up a second will to protect your non-probate assets. When is it time to get a will? As soon as you start accumulating assets it is important to have a will and a power of attorney. A will should be updated when there are major life changes or as your assets change. Who should I choose as my executor? A trusted lawyer can walk you through the responsibilities of an executor. Will your executor have the maturity and time to fulfill their responsibilities? Are they willing to take on the role? Here is a quick check list to help you plan your estate: Update your will(s). Update beneficiaries on your investments and life insurance policies. Create a detailed Net Worth summary and file it near your will. This summary will act as a road map for your executor.

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Grab a cup of tea or coffee and let’s take a closer look at the family cottage. How can you ensure the family cottage continues to generate happy memories, not taxes and family disputes? If you’re lucky enough to own or have access to a family cottage, it’s never too early to consider taxes, probate, and future ownership. What happens to the cottage if mom and dad both pass away? A cottage is a capital asset. This means when the owner sells the property or passes away, a deemed disposition creates a tax liability. What will the tax consequence be? Your capital gain is calculated as the fair market value of the cottage MINUS the original purchase price, cost of capital improvements and selling fees. You then claim 50% of your capital gain as income and your taxes owing are based on your marginal tax rate for the year. In Ontario this could be up to 53.53%. Regarding Capital Improvements, renovations can be added to your adjusted cost base. This doesn’t include general upkeep – but when in doubt, keep the receipts! It is crucial to consult a tax professional when considering your cottage’s future. Individuals or a family unit have access to the principal residence exemption, meaning the growth of your principal residence is not taxed. If you own two properties like a house and a cottage, you may be able to use the principal residence exemption on the cottage instead of your house. In addition to regular taxes there is probate to consider. Assuming the cottage remained in mom and dad’s ownership until their final passing, the cottage asset then goes through probate. Currently in Ontario that means 0% on the first $50,000 of the estate and 1.5% on the portion over $50,000. For example, that means a $300,000 cottage would trigger up to $4,500 in probate fees. It might make sense to trigger a sale while living to avoid probate fees. Since some taxes are unavoidable it’s important to have a family discussion about future ownership and how taxes will be paid. If the goal is to keep the cottage in the family, will the estate have liquid assets to cover the taxes? A common strategy is to use permanent life insurance to fund the expected probate fees and taxes. If the owners have multiple children, will all the kids inherit the cottage? If multiple siblings become owners, it is important to draft a family agreement in advance that lays out: property management, access to the cottage, dispute resolution and options/restrictions regarding sale of the cottage. The family cottage can be lovely and is something worth protecting. A trusted lawyer will update your will, an accountant will confirm tax liabilities and a Financial Advisor can guide you through the options for current ownership and estate considerations. Refill your cup of tea and enjoy the cottage life.

Cyndy Batchelor, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Planning your vacation can be fun, yet stressful, if you are working within budgetary or travel restrictions. Many vacationers have turned to camping or have decided to create a backyard oasis, complete with a new inground pool. Is this right for you? Here are a few financial tips to remember when planning your time vacation, or if you decide to invest in a camping trailer or complete some backyard enhancements. Plan your vacation according to your budget. Pay for everything with cash (or debit in a pandemic!) and stick to what you can afford. Do not book the luxe hotel if your budget dictates the 3-star hotel. You could always choose one night at the fantasy location as a special treat. Explore local attractions. Local parks, like the South Nation River, fishing sites, like Cass Bridge Conservation, Ouimet Farms in Vankleek Hill, and Golf at Cloverdale Links or Nationview. A day of outdoor family fun can be a great idea for budget friendly ways to spend summer days. Take a road trip and make the drive a part of the experience. Pack your own snacks and entertainment for the trip. For meals try local establishments rather than chain restaurants. If you are not a camper, but want to try it, rent a rustic cottage for a week. A $1,200 rental is a lot more manageable than spending $30,000 on a new camper. Is it a phase or a lifestyle? If you are contemplating getting a loan for that trailer or taking a second mortgage for an inground pool, ask yourself the all-important question – is this something you can see yourself using for the next 20 years? Or will you be going back to destination travel when the restrictions are lifted? Do not forget the other costs. Pools come with additional monthly maintenance costs for chemicals, accessories and hydro bills. Have you budgeted for this? Remember, whether you are planning a staycation, a vacation, or a day trip, it is about relaxing and making memories, not about the dollars you spend. Have fun and enjoy your family!

Daren Givoque, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. As a Financial Advisor I help clients with estate planning, which includes identifying their assets and determining how the assets will be transferred to their heirs when they pass away. Recently, I was helping one of my clients, Brian, gather the items he needed to build a solid plan for his estate. While reviewing his assets, Brian mentioned that he had money tied up in cryptocurrency. He wondered how to ensure these assets would be transferred to his wife and kids. Cryptocurrency has been on the market for the past decade, starting with Bitcoin in 2009. According to capital.com there are over 3000 types of digital currencies in existence, grouped into three categories: altcoins, tokens, and Bitcoin. Simply stated, cryptocurrency is an internet-based financial transaction between two parties, using digital cash. Once a cryptocurrency account is created, a private digital key is generated. Only the owner has access to the key and the funds in the account. Storing the key safely is essential for maintaining the account’s security and ensuring the owner continues to have access to the funds. I told Brain that we could address cryptocurrency in his estate plan in two ways: Treat cryptocurrency like any other digital asset (online trading accounts) and draft authorization in the will/POA for the executor or attorney to deal with the account; or Create a separate memorandum identifying the type of cryptocurrency held, and where it is stored. I recommend this route because, if the private key information is in the will itself, it becomes part of the public record through the probate process, potentially exposing sensitive information that could put the asset at risk. Since anyone with the private key can access a cryptocurrency account, it is important to store it securely. I recommended that Brian use a third-party service to manage his private key, entrust it to a family member or advisor, or keep it on a thumb drive in a safety deposit box to ensure the cryptocurrency can be accessed by executors, attorneys and/or heirs. A more unconventional option is something called a “dead man’s switch”— an automated program that emails the user at specific times. If it doesn’t hear back, it will check death records and, if you have died, will transfer the value of your cryptocurrency into a specified account. This can be anyone but is often the account of the executor, who will oversee the distribution of the estate to any heirs. Cryptocurrency is a unique asset and I understand the nuances and complexities of planning how to pass it on to the next generation safely and effectively. I was able to work with Brian to create a plan that he was comfortable with and that would ensure the value of his cryptocurrency will be transferred to his loved ones.

Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Grab your favourite cup of tea or coffee and let us protect your Wealth Plan. In addition to building assets and reducing debts, a comprehensive Wealth Plan should provide risk mitigation. Your wealth is growing – you are building your retirement equity in RRSP, TFSA, rental properties, business ventures and perhaps workplace pensions. You have an income that supports your lifestyle expenses including mortgages, car payments, vacations, and retirement savings. Have you considered what happens if you become sick or injured? How do you continue to fund your lifestyle and grow your wealth? If you are currently 35 years old and are making $50,000 per year, you will be generating $1,500,000 of income over the next 30 years! Is your ability to earn an income protected? The good news is that you may already have some level of protection against illness or injury. In Ontario, the Workplace Safety Insurance Board provides coverage for work-related illness and injuries, providing income replacement until you can return to work. Not all industries, however, are covered through WSIB. Employment Insurance may also be an option. If you meet the required number of hours in the 52-week timeframe you could be eligible for 15 weeks of taxable benefits after a 2-week waiting period. EI comes in as a taxable benefit and is based on a percentage of your income. You would receive 55% of your weekly paycheque, up to a maximum of $595 per week. For the self-employed there are very specific requirements to meet to be eligible for EI. Canada Pension Plan Disability Benefit is a monthly payment available to those who have a severe and prolonged disability. A doctor must sign off on a portion of the application. The candidate must also meet CPP contribution requirements based on a six-year timeframe. The maximum monthly payment in 2021 is $1,413; however, the amount received is based on past CPP contributions and the average received is only $1,031. You may also have coverage through other plans including creditor insurance, auto-insurance, critical illness policies. Finally, you may also have coverage through a group disability insurance policy or an individually owned disability policy. Depending on the specific policy, multiple factors could change; your start date for coverage, is your coverage taxable or non-taxable, how long does the coverage last, does the coverage exclude any conditions, and is there a refund of premium option. The possibilities may seem overwhelming, but your Financial Advisor can help you explore all the options, identify any gaps in your plan, and provide recommendations on how to strengthen the risk mitigation portion of your Wealth Plan.

Cyndy Batchelor & Sarah Chisholm, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Q: What is the difference between Term Life Insurance and Whole Life Insurance? A: Term Life Insurance is insurance you take out for a specific term and cost. Once the term expires, the cost of term insurance increases or you can choose to let the policy expire. Whole Life or permanent insurance does not expire if you continue to make your premium payments. With Whole Life insurance, some of your premium goes towards purchasing an investment component held within your policy. Depending on the type of Whole Life insurance you purchase, this can increase the value of your death benefit. Q: In what instance would Term Life Insurance be a good choice for me? A: Term insurance can be a great value for your money. Scenarios in which you would want term insurance would be for mortgage coverage, child support, or income replacement. Term Insurance helps to pay out your liabilities and debts should the unthinkable happen. Term products available include Term10, Term20, Term30, and Termto65. It is important to review these options with your Insurance Advisor who will complete a Needs Analysis to determine an appropriate amount of coverage and length of term. Q: I have heard about Whole Life Insurance helping with tax savings. How could this help me? A: In Canada insurance proceeds flow through to your beneficiaries’ tax free. Outside of spousal rollovers, the only other assets that pass tax free to your beneficiaries are your primary residence and your TFSA account. Like a TFSA, the cash value in a Whole Life policy grows tax free, so you can use insurance premiums to shift investable assets from a taxable account into life insurance. Is your TFSA is maxed out, do you have sizable RRSPs, a pension and outside Non-Registered Investments? When you and your spouse begin collecting CPP and OAS you will likely face an OAS claw back due to your income levels. A Whole Life Estate strategy can help to preserve your assets in a tax-sheltered investment, allowing you to smooth your income, save your OAS, lower your annual taxes and at the last death, lower your estate taxes. Your Advisor can work with you to review your Wealth Plan and determine if Whole Life Insurance is a fit for you. Insurance products and services are provided through Assante Estate and Insurance Services Inc.