{"id":24175,"date":"2020-05-27T08:19:02","date_gmt":"2020-05-27T15:19:02","guid":{"rendered":"https:\/\/hfin.ca\/?page_id=24175"},"modified":"2020-05-27T08:27:21","modified_gmt":"2020-05-27T15:27:21","slug":"segregated-funds-for-estate-planning","status":"publish","type":"page","link":"https:\/\/hfin.ca\/segregated-funds-for-estate-planning\/","title":{"rendered":"Segregated Funds for Estate Planning"},"content":{"rendered":"<div>\n<style type=\"text\/css\">\n@-webkit-keyframes oryCellResizeableAnimate {<br \/>\n  0% {<br \/>\n    background-color: hsla(0,0%,100%,.26);<br \/>\n    top: 45%;<br \/>\n    bottom: 45%;<br \/>\n  }<\/p>\n<p>  50% {<br \/>\n    background-color: hsla(0,0%,100%,.12);<br \/>\n    top: 0;<br \/>\n    bottom: 0;<br \/>\n  }<\/p>\n<p>  to {<br \/>\n    background-color: hsla(0,0%,100%,.87);<br \/>\n    top: 45%;<br \/>\n    bottom: 45%;<br \/>\n  }<br \/>\n}<br \/>\n@keyframes oryCellResizeableAnimate {<br \/>\n  0% {<br \/>\n    background-color: hsla(0,0%,100%,.26);<br \/>\n    top: 45%;<br \/>\n    bottom: 45%;<br \/>\n  }<\/p>\n<p>  50% {<br \/>\n    background-color: hsla(0,0%,100%,.12);<br \/>\n    top: 0;<br \/>\n    bottom: 0;<br \/>\n  }<\/p>\n<p>  to {<br \/>\n    background-color: hsla(0,0%,100%,.87);<br \/>\n    top: 45%;<br \/>\n    bottom: 45%;<br \/>\n  }<br \/>\n}<br \/>\n<\/style>\n<style type=\"text\/css\"><\/style>\n<div class=\"juiced\">\n<div id=\"postToSend-3\">\n<div class=\"ory-row\" style=\"box-sizing: border-box; display: flex; -webkit-box-flex: 0; -ms-flex: 0 1 auto; flex: 0 1 auto; -webkit-box-orient: horizontal; -webkit-box-direction: normal; -ms-flex-direction: row; flex-direction: row; -ms-flex-wrap: wrap; flex-wrap: wrap; margin-right: 0; margin-left: 0; position: relative;\">\n<div class=\"ory-cell ory-cell-sm-12\" style=\"position: relative; box-sizing: border-box; -webkit-box-flex: 0; -ms-flex: 0 0 auto; flex: 0 0 auto; padding-right: .5rem; padding-left: .5rem; -ms-flex-preferred-size: 100%; flex-basis: 100%; width: 100%; min-width: 100%;\">\n<div class=\"ory-row ory-cell-inner\" style=\"box-sizing: border-box; display: flex; -webkit-box-flex: 0; -ms-flex: 0 1 auto; flex: 0 1 auto; -webkit-box-orient: horizontal; -webkit-box-direction: normal; -ms-flex-direction: row; flex-direction: row; -ms-flex-wrap: wrap; flex-wrap: wrap; margin-right: 0; margin-left: 0; position: relative;\">\n<div class=\"ory-cell ory-cell-sm-12\" style=\"position: relative; box-sizing: border-box; -webkit-box-flex: 0; -ms-flex: 0 0 auto; flex: 0 0 auto; padding-right: .5rem; padding-left: .5rem; -ms-flex-preferred-size: 100%; flex-basis: 100%; width: 100%; min-width: 100%;\">\n<div class=\"ory-cell-inner ory-cell-leaf\">\n<div class=\"ory-plugins-content-spacer ory-plugins-content-spacer-read-only\" style=\"border-bottom: none; position: relative; border: 1px solid rgba(0, 0, 0, 0.12); border-color: transparent;\">\n<div style=\"height: 20px;\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"ory-row ory-cell-inner\" style=\"box-sizing: border-box; display: flex; -webkit-box-flex: 0; -ms-flex: 0 1 auto; flex: 0 1 auto; -webkit-box-orient: horizontal; -webkit-box-direction: normal; -ms-flex-direction: row; flex-direction: row; -ms-flex-wrap: wrap; flex-wrap: wrap; margin-right: 0; margin-left: 0; position: relative;\">\n<div class=\"ory-cell ory-cell-sm-12\" style=\"position: relative; box-sizing: border-box; -webkit-box-flex: 0; -ms-flex: 0 0 auto; flex: 0 0 auto; padding-right: .5rem; padding-left: .5rem; -ms-flex-preferred-size: 100%; flex-basis: 100%; width: 100%; min-width: 100%;\">\n<div class=\"ory-cell-inner ory-cell-leaf\">\n<div>\n<p>As we age and our thoughts turn to estate planning, Segregated Funds may present a valuable planning opportunity. \u00a0As we progress through the stages of life our investment focus changes from growth to income to preservation.\u00a0 Usually, the expected rates of return reduce as we age, primarily because we have less time to make up for a loss and feel the need to be more conservative in our approach.\u00a0 Anyone who has retired shortly before or after a major market correction (or crash!) understands the impact volatility can have on their enjoyment of a comfortable retirement.<\/p>\n<p>In addition, none of us want to leave an estate for our heirs which could be a fraction of what was intended or be a catalyst for family discord.\u00a0\u00a0 Fortunately, you do not have to forego the opportunity of growth in order to preserve the capital that you wish to leave to your family.\u00a0 Segregated Funds not only protect your estate against market fluctuations, they also provide the comfort of knowing the inheritances you wish to leave will be received by those for whom they were intended.<\/p>\n<p><strong>What are Segregated Funds?<\/strong><\/p>\n<p>Segregated funds are similar to mutual funds and represent market- based, equity, bond or fixed income investments.\u00a0 They differ from mutual funds in that as they are offered by life insurance companies, they have special benefits that mutual funds do not.\u00a0 These special benefits include:<\/p>\n<ul style=\"margin: auto 2em 1.5em; list-style-type: disc;\">\n<li style=\"list-style-type: inherit; display: list-item; margin: .2em 0 0 .2em;\">\n<p style=\"margin: 0;\"><strong>A guarantee of a minimum of 75% or 100% of your deposits upon the contract maturity<\/strong>\u00a0<strong>or when you die.<\/strong>\u00a0The minimum guarantee on maturity states that (for most companies) a minimum of 75% of your deposits are guaranteed at the 15th\u00a0year. A 100% maturity guarantee is also available for a higher cost.\u00a0 For the purposes of this article we are focused on the death benefit guarantee;<\/p>\n<\/li>\n<li style=\"list-style-type: inherit; display: list-item; margin: .2em 0 0 .2em;\">\n<p style=\"margin: 0;\"><strong>Creditor protection<\/strong>\u00a0which can protect your investment against an unexpected lawsuit or bankruptcy;<\/p>\n<\/li>\n<li style=\"list-style-type: inherit; display: list-item; margin: .2em 0 0 .2em;\">\n<p style=\"margin: 0;\"><strong>The ability to name a beneficiary<\/strong>\u00a0whom receives your investment when you die. When this occurs the death benefit payout bypasses your estate and your investments will be paid to whom you intended with no probate nor administrative fees. \u00a0In addition, there would be no danger of any will variation action brought on by a disgruntled family member or heir.<\/p>\n<\/li>\n<\/ul>\n<p><strong>Estate planning advantage of the death benefit guarantee<\/strong><\/p>\n<p>In addition to the above, the 100% death benefit guarantee allows someone in their 70\u2019s or 80\u2019s (or younger) to be slightly more aggressive in their investing without the danger of losing value for their estate.\u00a0 Potential for growth remains without risk of dying when the markets are down.<\/p>\n<p>The ability to name beneficiaries allows you to earmark specific funds to intended beneficiaries without the cost of a trust or probate fees.\u00a0 This can be particularly advantageous in the circumstances of a blended family.\u00a0 As previously mentioned, avoiding any wills variation action is also of comfort in knowing your estate will not be held up after your death while the courts dictate who is to receive some of the proceeds of your estate even if it is against your original intentions.<\/p>\n<p>Many insurance companies offer segregated funds which are pools of investments managed by well-known, well-performing and reputable portfolio managers.\u00a0 The fees charged for segregated funds are like those charged for mutual funds with a modest add on for the guarantees.\u00a0 In many cases, depending on the insurance company, there is a reset of the death benefit to lock in gains.\u00a0 For example, one major company has an automatic reset of the death benefit, which occurs every three years until age 80.\u00a0 Once reset, the death benefit guarantee cannot decrease (unless withdrawals have been made), even if the market declines.\u00a0 After age 80, the guarantee is the greater of the last reset or the market value of the funds.<\/p>\n<p>If you are trying to determine the proper balance of performance and risk in your investments that you have earmarked for your heirs, Segregated Funds would be worthwhile investigating.\u00a0 I would be delighted to assist you in determining if this approach is right for you and matching up with the insurance company which best meets your objectives.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"ory-row ory-cell-inner\" style=\"box-sizing: border-box; display: flex; -webkit-box-flex: 0; -ms-flex: 0 1 auto; flex: 0 1 auto; -webkit-box-orient: horizontal; -webkit-box-direction: normal; -ms-flex-direction: row; flex-direction: row; -ms-flex-wrap: wrap; flex-wrap: wrap; margin-right: 0; margin-left: 0; position: relative;\">\n<div class=\"ory-cell ory-cell-sm-12\" style=\"position: relative; box-sizing: border-box; -webkit-box-flex: 0; -ms-flex: 0 0 auto; flex: 0 0 auto; padding-right: .5rem; padding-left: .5rem; -ms-flex-preferred-size: 100%; flex-basis: 100%; width: 100%; min-width: 100%;\">\n<div class=\"ory-cell-inner ory-cell-leaf\">\n<div class=\"ory-plugins-content-spacer ory-plugins-content-spacer-read-only\" style=\"border-bottom: none; position: relative; border: 1px solid rgba(0, 0, 0, 0.12); border-color: transparent;\">\n<div style=\"height: 20px;\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As we age and our thoughts turn to estate planning, Segregated Funds may present a valuable planning opportunity. \u00a0As we progress through the stages of life our investment focus changes from growth to income to preservation.\u00a0 Usually, the expected rates of return reduce as we age, primarily because we have less time to make up [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.9 - 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