Financial Planning and Investment Notes

Empire Life Form

  • Form to be signed for Empire Life.

  • Death certificate and police information sent.

  • Form includes: Sean's policy number, beneficiary information (client), executor information (client), family doctor information, last hospital (South Huron Hospital).

  • Group benefits: RBC insurance policy number and amount.

  • Electronic signature process: Sign and date, then return for forwarding.

Sun Life Investments

  • Form for Sun Life investments.

  • Client is the claimant.

  • Tax receipt account (TFSA) and RRSP to be rolled over to the client.

  • TFSA rollover will not affect contribution room.

  • CRA will CRA will acknowledge that the funds are from Sean, preventing any penalties.

    TFSA Rollover Details

  • Transfer to client's TFSA without penalty.

  • Money taken out opens up contribution room.

Form Details

  • Includes Sean's information (from tax rate).

  • Client as successor holder for easy transfer.

  • Transfer to Catalyfe account.

  • Separate form to instruct Sun Life on investing funds in Catalyfe TFSA.

  • Request for tracking number on check mailed to Canon Life.

RRSP Rollover

  • Exact same form as TFSA for RRSP rollover.

  • No tax implications for RRSP rollover.

  • Options for RRSP: roll over into client's RRSP.

  • LIRA (Locked-In Retirement Account): possible restrictions based on group benefits and amount.

RRSP Access and Taxation

  • Taking money out of RRSP incurs withholding tax (e.g., 10% on amounts up to $5,000; 15% or 20% on $5,000-$10,000; 30% above that).

  • Withholding tax is usually recovered during income tax filing.

  • LIRA access may be possible through financial hardship, with a 10% withholding tax penalty.

  • TFSA allows penalty-free withdrawals without affecting income.

Post-Transfer Strategy

  • Review and allocate funds appropriately after transfer.

  • Determine best account (TFSA or RRSP) for accessing money.

  • Ensure Sun Life codes the transfer correctly to avoid penalties.

  • Wet signature required for a specific form; to be signed in person.

  • Form includes client and Sean's information, indicating surviving spouse status.

Transfer Amounts

  • Past Due Savings Account: 65,902.8865,902.88

  • RRSP: 14,102.3814,102.38

  • These amounts will be emailed to the client.

Fund Allocation and Transfers

  • Submitting form to Sun Life to allocate funds to Catalyfe.

  • Initial plan to put all funds into one existing fund in client’s portfolio (TFSA and RRSP) for simplicity.

  • After review and discussion, reallocate based on client preferences.

Transfer Timing

  • Expected completion shortly after paperwork is received.

  • Check issuance expected by Friday if paperwork sent Wednesday.

  • Monitoring of client’s Canner Life profile for deposit.

  • Follow-up to ensure tracking number is used for monitoring mail.

Specific Fund Allocation

  • Choosing Fidelity TrueNorth fund for initial allocation.

  • Same form used for both TFSA and RRSP.

Additional Forms

  • Two forms to notify Camelife about incoming funds from Sun Life.

  • Indication that money is coming from an external policy.

  • Forms sent to both Sun Life and Life to keep on lookout.

Risk Assessment and Reallocation

  • Using a balanced fund initially.

  • Reallocation based on conversation and risk tolerance.

  • Potential tweaks to increase exposure to higher-risk funds.

  • Consideration of higher-risk funds to maximize returns, especially since client doesn’t check regularly.

  • Avoiding a “parking lot” approach by putting funds into a known, usable fund.

  • Signature highlighting on forms for client and advisor.

Mortgage Considerations

  • Mortgage with CIBC renewing in February next year.

  • Low interest rate (2% and a change).

  • Potential for higher returns through investment.

Mortgage Strategy

  • Consider putting 20% down on the mortgage once funds are received.

  • Contact CIBC to determine the initial mortgage amount to calculate 20% accurately.

  • This strategy could significantly reduce the principal and overall interest paid.

  • Comfort level with current mortgage payments.

  • Possibility of paying off the mortgage entirely, though there would be a penalty.

Alternative Funding

  • Money from visitation and funeral totaling $47,000, plus additional funds from Sean’s work.

Maternity Leave and Financial Stress

  • Desire to finish maternity leave without financial stress.

  • Life insurance should cover the mortgage.

  • Re-evaluation in February to decide whether to pay off mortgage or not.

Penalty Assessment

  • Determine the penalty for paying off the mortgage early.

Manulife One Account

  • Client is an employee with Manulife, potential for a discount on Manulife One fees.

  • Fee waiver possible with certain Visa arrangement, but may only last a year.

  • Currently paying a fee.

Manulife One vs. Traditional Banking

  • Manulife One functions as both a bank account and a mortgage.

  • Every paycheck automatically reduces the mortgage.

  • Flexibility in managing payments, especially with sporadic commission income.

Account Fees and Alternatives

  • MediLife savings account is free with a $1,000 balance.

  • Manulife One might have a discounted rate for employees or advisors, but still potentially has a fee even with a positive balance.

Future Employment Plans

  • Uncertainty about returning to full-time work with three children.

  • Due to go back in September of next year.

Interest Rates and Calculations

  • Manulife One and CIBC both charge interest rates.

  • Manulife One has an additional fee on top.

  • Changing banking information will affect paychecks, life insurance, and investments.

  • Manulife’s mortgage rates were previously very competitive.

Interest Calculation Differences

  • Manulife One calculates interest differently than traditional banks.

  • Interest can fluctuate monthly based on spending and savings.

Manulife One Benefits and Drawbacks

  • Suited for savers.

  • May not lead to debt-free status.

  • Alternative: Move funds to a savings account with no monthly fee if the mortgage is paid off.

Financial Planning and Investments

  • Check income tax papers for TFSA contribution room.

  • Max out TFSA to ensure tax-free savings.

  • Revisit Sean’s RRSP set aside for the kids’ education and consider an education savings plan.

Education Savings Plan (RESP)

  • Tax-sheltered savings account with a 20% grant.

  • Principal amount can be moved to RRSP if kids don’t go to school.

Nonregistered Account

  • Majority of proceeds will go into a nonregistered account (taxable).

  • Interest earned in the nonregistered account is taxable (capital gains or dividend interest).

  • Goal: Maximize tax-friendly vehicles to minimize taxable income.

Life Insurance for Kids

  • Life insurance policy for the kids ($50,000).

  • Limited buffer room to add more funds.

RESP Considerations

  • Using RESP as a last resort to avoid affecting income tax.

  • Potential impact of nonregistered account on income bracket.

Additional Financial Strategies

  • Consider opening a life insurance line for the kids with dividends.

  • Use 20% mortgage down payment to reduce mortgage funds.