The Canadian income tax system is structured in such a way that taxpayers and their estates are often liable to pay significant taxes upon their death.
These taxes can represent a large proportion of the value of the deceased’s estate and can significantly reduce the amount of residual assets available for distribution to the estate’s beneficiaries.
Fortunately, the tax an estate will be subject to isn’t set in stone and with a properly structured will, a taxpayer can significantly reduce the taxes payable on their final income tax return (as well as the taxes payable by their estate subsequent to their death).
Leave assets to your spouse
A strategy used to reduce a taxpayer’s liability on a final tax return involves the drafting of a will that leaves assets to their spouse rather than other beneficiaries.
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By Anne Levy-Ward, for BrighterLife.ca
It’s easy to understand the importance of protecting ourselves and our families – we wear seatbelts, for example, because we understand how they keep us safe in case we’re in a car crash. We have medical checkups because we understand how our doctors can take action when they spot health problems.
Supplemental health insurance plans obtained through an employer or purchased as an individual are another way to protect ourselves and our families “in case” – in this instance, in case of a threat to our financial security from illness or accident. They’re called “supplemental” because they add to the coverage Canadians receive through their provincial governments. (Separate plans are available for visitors or recent immigrants without provincial health coverage.) But the kind of protection supplemental health insurance offers isn’t as easy to figure out as a seatbelt or a checkup. To help you understand how it works so you can weigh the merits of buying coverage, here are answers to some common questions:
By Anna Sharratt, BrighterLife.ca
Chuck Pusateri is throwing everything he’s got at type 2 diabetes, despite the genetic odds stacked against him. “My grandfather had diabetes, so did my dad and my uncle — I’ve sure got diabetes in my family history,” says the 59-year-old Victoria, B.C. native.
So when he found out his blood sugar levels were high when heading into heart surgery six years ago, he knew the odds had caught up to him. “When the nurse came up after the surgery to show me how to inject insulin, I woke up to the fact I had to do something,” he says.
With type 2 diabetes, glucose (sugar) builds up in the blood instead of being used by the body for energy. It’s caused by factors such as genetics, obesity and a sedentary lifestyle. It’s different from type 1, which is caused by a malfunctioning pancreas that fails to produce the sugar-controlling hormone insulin, causing the same glucose build-up.
As Pusateri was on the cusp of full-blown Type 2, he decided to take action. He retired from his job, began working out at the gym most days of the week and slimmed down 20 pounds. He started taking Metformin, a drug that increases the body’s sensitivity to insulin. He also changed his diet, eating smaller meals throughout the day to keep his blood sugar level stable.
“I don’t eat a lot of French fries,” says Pusateri, who is confident the steps he’s taking will help prevent the disease.
Are you at risk?
Type 2 diabetes is disease that tends to sneak up on people, says Dr. Ian Blumer, chair, Clinical Practice Guidelines Dissemination and Implementation Committee, Canadian Diabetes Association, and the author of six books on managing diabetes, including Diabetes for Canadians for Dummies.
But there are certain factors which increase your risk of becoming one of the 9 million Canadians who have diabetes or pre-diabetes:
- Being overweight. A high body mass index or BMI (a measure of body fat calculated from height and weight) raises your risk.
- Increasing age. The older you are, the higher your chances of developing the disease.
- Being inactive, which can increase the amount of insulin in your body.
- A strong family history. The more close relatives you have with Type 2, the higher your odds.
- Having gestational diabetes in pregnancy.
- Having polycystic ovarian syndrome, which causes a hormonal imbalance.
- Your cultural background. Being Asian, South Asian, Aboriginal, Hispanic or African — the Canadian Diabetes Association reports these populations are at higher risk of the disease.
- Taking anti-psychotic drugs to treat mental illnesses such as schizophrenia. These medications have been linked to insulin resistance, a condition in which insulin becomes less effective at reducing blood sugar.
The trick is to stop pre-diabetes in its tracks before your body stops using insulin effectively, or else risk complications such as eye and nerve damage, kidney failure, and a higher risk of heart disease, stroke and amputation.
What most people don’t know, says Blumer, is that through tiny changes, their risk can go down. “I think a lot of people have a pessimistic attitude,” he says. “They think if they’re going to get diabetes, it’s going to happen and there’s nothing they can do to prevent it, but that’s often not the case.”
“Up to 50% of type 2 diabetes cases can be prevented or delayed with healthier eating and increased physical activity,” says Randi Garcha, spokesperson for the Canadian Diabetes Association.
Blumer advocates starting small. Losing weight — just 1 to 5% of your body weight — puts a significant dent in your risk. “Losing just 10 pounds if you’re 200 pounds makes a big difference,” he says.
And you don’t have to become a gym bunny to put in the 30 or more minutes a day/five days or more a week of exercise that the Public Health Agency of Canada recommends. Blumer suggests breaking your exercise into manageable chunks — a brisk, 10-minute walk at lunch, some weight training at the gym or at home. “It doesn’t have to be a massive change,” he says.
He doesn’t advocate completely denying yourself sweets, either. “It’s not as if you have one chocolate bar you’re going to get diabetes,” he says. It’s excess calories on an ongoing basis that put you at risk.
And if people feel they’re going nowhere despite trying to diet and exercise, Blumer says doctors will occasionally prescribe drugs such as Metformin. These medications can delay the onset of the disease.
Above all, says Pusateri, take action rather than pretending type 2 diabetes will go away.
|Find out more about preventing and managing diabetes. Visit Discussing diabetes.|
If you had a crippling accident or were diagnosed with a critical illness tomorrow, would your family be able to cope?
by Julie Cazzin, for Money Sense
Ten years ago, Janet Freedman was rushing out the door of her home for work. Her arms loaded with tax returns, she missed a step on the stairs on her front porch and fell, hitting her head on the concrete. When her neighbours found her, she was barely conscious, with her head trapped between her own front steps and those of the house next door.
Paralyzed, with a partially severed spinal cord, it took more than six months of hospitalization and two years of intensive physiotherapy for Freedman to resume her life. She was unable to work and had no one to support her. “Thank goodness I had a good private disability insurance plan,” says Freedman, a certified financial planner and author of Hit by an Iceberg: Coping with Disability in Mid-Career. “Those payments allowed me to concentrate on my rehabilitation and to live my life without worrying about where the money was coming from for daily living expenses. That made a big difference to me and my recovery.”
by Larry MacDonald for Money Sense Magazine
At the start of the year, the annual contribution limit for Tax-Free Savings Accounts rose by $500, allowing Canadians to shelter $5,500 in investments from tax each year, in addition to whatever RRSP room they may have. The Conservatives plan to go even further—if the federal government balances its books, something expected by 2016, it has promised to raise the TFSA contribution ceiling to $10,000 a year. But left-of-centre policy wonks oppose expanding contribution room. They say TFSAs favour the wealthy and lifetime contributions should be capped. Could they be right?
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