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Information Center - Life Insurance Strategies

Keep You Cottage Preserve Your Wealth Provide a Legacy Lower Your Tax Bill
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Don't lose your cottage to the government

 Keep Your Cottage in the Family

Over the last decade more and more Canadians have bought recreational properties, driving up both demand and prices. You can't build a lake and put homes on it like you can in a farmer's field. Supply and demand dictate that the price of cottage or recreational properties will only go up in value.

Many are now finding that the little plot of lakefront they purchased years ago is now worth far more than they originally paid. For those wanting to sell, this is great news. However for those who want to keep their cottage in the family this presents a problem. Upon the death of the owner, the Canada Revenue Agency will tax the cottage on this increase in value. If your family does not have the money, they could be forced to sell your vacation property to cover the taxes owing.

Fortunately, there is a solution. Using the Cottage Succession Planning strategy, you can leave your legacy intact for the next generation.

How Does It Work?

1. You purchase a Universal Life policy using the Joint-Last-to-Die option so the
    proceeds are payable at the death of the second spouse. Your children (or
    whoever is to inherit the cottage) are named as beneficiaries.
2. The death benefit is set equal to the estimated taxes owing.
3. The insurance premiums paid during the life of the policy end up being a
    fraction of the eventual tax bill.
4. Upon the death of the second spouse, the death benefit is triggered and used
    to pay the taxes owing.

Using the Cottage Succession Planner, you are not only paying less than the eventual tax bill, but are paying in easily manageable installments, rather than all at once. This is much easier on the budget, and good way to convince the eventual beneficiaries to pay all or a portion of the premiums (after all, they are the ones who benefit from this strategy!).

If you think you could benefit from the Cottage Succession Planning strategy, or would like to explore other ways in which you can use Universal Life to your advantage, give us a call at 1-877-628-5762. We would be happy to discuss it with you.
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