Toronto Estate Planning Demystified: Unlocking the Secrets of Financial Legacy Building

Estate planning often likened to watching paint dry in slow motion, could instead be your chance to script your financial saga, complete with dream homes, career legacies, and a lasting impact on your loved ones. Imagine it as a Sims game where you have full control over your financial destiny, ensuring a happily-ever-after ending for all involved. In this guide, we’ll navigate through wills, trusts, and even estate taxes, transforming what could be a snooze-fest into a thrilling journey of financial foresight.

A Tale of Estates: Demystifying Estate Planning

Welcome to “A Tale of Estates,” where estate planning isn’t about grim reapers but rather the financial deities of Toronto. You’re the ruler of your financial realm, but without a roadmap (aka an estate plan), your heirs might find themselves lost in a maze more confounding than a telenovela plot twist. Estate planning isn’t just for the wealthy elite; it’s for anyone who wants to ensure their hard-earned assets, from a comic book collection to a family home, don’t vanish into thin air overnight.

Why bother with estate planning? Think of it as penning your financial epic. Without it, you leave the destiny of your kingdom to chance, akin to blindly swinging at a pinata during an earthquake. It’s about avoiding a family feud worthy of the Game of Thrones, ensuring your legacy doesn’t become a melodrama rivaling the greatest soap operas in history.

In essence, estate planning is a strategic game of financial chess, positioning your assets and beneficiaries strategically to secure a victory rather than a stalemate. So, saddle up your trusty steed (or ergonomic office chair) and prepare for a journey into the enchanting realm of estate planning, where every move you make shapes your financial destiny.

Does the FHSA account have an expiry date?

•  Yes, your First Home Savings Account expires exactly 15 years after the day it is opened, or when the individual turns 71 (whichever comes first).
• If your FHSA expires before you buy a home, the funds can be transferred into your RRSP.
• At age 71 – a notice will be issued before the account needs to be closed, at which point it can be transferred to an RRSP or RRIF with no penalties or withdrawn as taxable income and subjected to withholding tax.

Withdrawals from an FHSA

For you to qualify for a withdrawal from your FHSA, the following must be true

• You must be a first-time homebuyer at the time you make the withdrawal. This means that you cannot have owned a home where you lived in any part of the calendar year before the withdrawals up to 30 days after moving into your new home.
• The CRA may request of you a written agreement that you’re purchasing a property before October 1 of the year following your withdrawal
• You intended to live in the qualifying home (a housing unit located in Canada) as your principal residence for one year after purchasing or building it.
• After making sure all the previous are true, only then FHSA withdrawal is possible.

Claiming Deductions

When you contribute to your First Home Savings Account, you don’t need to claim a deduction for that year. Similar to an RRSP contribution, you can carry forward any unused deductions indefinitely (throughout the account’s lifespan of 15 years) and use them in subsequent years. For example, if you make an $8,000 contribution to your FHSA in 2023, you can claim some or all of the deduction to your
taxes next year (2024) or in later years.

Over contribution

If you over-contribute, your over-contribution amount is subject to a 1% tax on the highest excess amount for each month it is over the limit. This will continue to apply each month until the excess amount is removed from your FHSA, which stops accruing when.
– You withdraw the excess amount from your FHSA
– You receive a new contribution room, which happens on January 1 of the following year.  You can deduct from your income any over-contributed amount in the year it is no longer considered an over-contribution, but not the year before that.

Resources + Banks

Government of Canada     TD Canada Trust     RBC     CIBC     National Bank

Consultation

To learn more about FHSA and how you can benefit, please speak with one of our advisors HERE