Planning Ahead

You’ve spent a long time building a lifestyle that you and all of our of your family have enjoyed

What you may not realize is after a long, healthy, fulfilling life the tax man is generally the happiest one at your going away party. A large portion of your financial success heads to Ottawa in the way of capital gains taxes unless you’ve employed some estate preservation strategies. HJ Group helps Canadians preserve what they’ve spent a lifetime building and put the people that matter most ahead of Revenue Canada.

Can you actually build up cash in a life insurance policy tax free?

Yes, cash that accumulates in a life insurance contract is sheltered.

Can you take cash out of a life insurance contract tax free?

Yes, there is a concept called ‘leveraged deferred compensation’. This concept allows you to assign a cash value life insurance policy for a secured line of credit. You can then use the line of credit to augment your income or capitalize on an opportunity. Since loans under the tax act aren’t considered income there are no negative tax consequences.

Why do people use life insurance to pay for their capital gains taxes?

Under the tax act, upon death, all assets of the deceased are deemed to be sold at their full market value and recorded on their final tax return as income. This obviously results in a very significant final tax bill and most people don’t have that kind of liquidity available. This results in selling off hard assets quickly which often leads to losses and/or unnecessary expenses. Life insurance however is instant liquidity that pays to a named beneficiary tax free. The taxes can be paid without forced liquidation of assets that have been accumulated over a lifetime.