|
Author: Rick Hoogendoorn Article source: http://www.livingnow.info/. Used with author's permission.
Some time ago I attended a seminar where participants were told to burn some money; a reasonably-sized amount of money. You should have heard the gnawing and gnashing of teeth in that room! Step right up, folks, and light it on fire. Come on now. It's only money.
Some people, likely less adept at saving than others, actually rushed forward in an attempt to show how money had no hold over them. There was a principle in there somewhere. Not sure what it was.
Others cowered into the corner, refused to take out their wallets, looking for the exits. It does seem reasonable to me to avoid torching cash. After all, you've worked hard for it. Put in years worth of work and put off many luxuries to accumulate what nest egg you have. Burning it would somehow seem to indicate a crack in the psyche.
But what if I told you that many people are geared right up to burn tens of thousands of dollars? Oh, they're not going to march forward to the front of some hotel ballroom and pull out stacks of cash from a briefcase and toss them all onto a controlled, indoor bonfire. Nope. That's dramatic. Their method is much harder to picture, but let's try and create a vivid picture nonetheless.
Imagine a retired widow or widower. Or, perhaps, a senior single person. A person who is finished working, and has been enjoying the fruits of their savings. They have accumulated several hundred thousand dollars in their RRSP, which has since been transferred to a RRIF. They receive income from this RRIF. Let's say it has $400,000 in it.
Like most of us, this person does not want to think about their own demise. Their focus is on their grandchildren, perhaps. Hobbies. The garden. Other things. They are, of course, surprised when they die, and even more surprised when they get a box of popcorn and a front row seat for the posthumous show called 'distribution of your assets'.
Let's go straight to the grand finale, shall we? In this last part of the show, the contents of the person's RRIF are put in an over-sized briefcase, sawed in half, and one half is tossed onto the gigantic bonfire known now as the Canada Revenue Agency. Let me explain…
The proceeds of an RRSP or RRIF can roll, tax-free, to a surviving spouse without any tax consequences. In our example, however, there is no spouse to roll the proceeds to. As a result, the full amount of the RRSP or RRIF comes into income in the year of death. What happens when you get a sudden influx of cash? Say, $400,000 worth of cash? Well, first of all it will put you in the very highest tax bracket. Second, you're taxed. (Hence the idea of just sawing that over-sized briefcase in half and tossing one half on the bonfire.)
Not convinced. Okay, forget the bonfire idea. Instead, half of the briefcase contents, $200,000 in our example, are put into a box, tied up with a nice red ribbon and hand delivered to … the Prime Minister. Like that better? Hmm.
Well, at least now you know what happens when you die. There's a big fire. There's gnawing and gnashing of teeth. People rushing for exits. And a few, good people, are sitting there calmly because they planned ahead, or had already gone through all of this at some weekend seminar.
Strategies do exist to avoid the erosion (torching) of your assets when you die. Talk to your financial advisor. About The Author
Rick Hoogendoorn is an 'associate' with Cheri Crause & Associates Inc. . Cheri Crause is a certified financial planner in Victoria, British Columbia. www.chericrause.com
rick.hoogendoorn@shaw.ca
Fireplace Screens - A Practical and Beautiful Addition To Your Home
There once was a time when the fireplace was the primary source of heat in most American homes. For those that could not afford a word-burning stove, the firep...
Increasing Patient Care and Reducing Liability in Seven Simple Steps
Nearly one million unconscious patients will arrive in the emergency department this year. Although most hospitals notify patient's next of kin immediately, be...
Building a Strong Business Relationship
When it comes to business and sales, building a strong relationship is critical. The stronger your relationship is with your customer, the more likely they will...
South Beach Diet The Review Diaries
There are masses of carbohydrate diets like the Atkins Diet and The Zone. Now Ham tons diet meets South Beach. I think most of us know the reason for it's creat...
Feeding
It's incredible how in life we do not only create ourselves, but we create and feed each other!
Your New Clothing Company - Apparel Sourcing
Ever wanted to start your own clothing company?
Parenting Your Teenager: The Trust Issue
To use a banking metaphor, if the teen-ager has made enough deposits in the ``trust bank,'' then he or she has earned the privilege of making a few withdrawals ...
Your IRS Tax Appeal Rights
Are you in the middle of a disagreement with the IRS? One of the guaranteed rights for all taxpayers is the right to appeal. If you disagree with the IRS about ...
Should You Get Out?
Did you know that 80% of the price movement in a stock or a mutual fund is determined by the overall market conditions and by the company's sector? This is the ...
Get the Big Dogs to Affiliate with You
Trying to get an affiliate program off the ground? You will want to use these steps to get the big dogs to promote your product.
Sound Walls on Freeways as Energy Collectors
Cruising down our Freeways, Highways and Toll Ways we often see large walls to block the sound to residential neighborhoods on the other side. This is to insure...
Dog Vaccinations - The Facts
A growing number of dogs are allergic to vaccinations. Your vet is likely to tell you that vaccinations are essential. But are they?
Search Engine Optimization and PPC for Small Business
Pay Per Click or natural SEO?
5 Diet Fitness Tips You Can Use Today
Are you ready to live a more powerful life by taking control of your
weight and physical condition? If so, here are five ideas that can
start you on the path to...
How to Promote Your Web Site by Writing Articles
Sharing knowledge on the web can be a very powerful way to establish your online presence and credibility. First, you write a thoughtful and informative article...
The Orphan Child Called ISO
ISO is one of the most overlooked features on digital cameras. Find out the benefits of this orphan feature and how you can use it to boost your camera's sensit...
5 Ways to Market Your Business For Free - Part I
If you're tired of the high cost of marketing online, then try these free techniques. Not only are they free, but they'll drive a ton of traffic to your site.
Sales Process - The Secret to Closing More Sales
Most sales training programs that teach salespeople how to sell specific products or services do not mention business problems. This is an unfortunate oversight...
Are You A Procrastinator?
What is the dictionary definition of a procrastinator? It is one who delays, defers action, puts off until another day. At some point in our lives all of us ha...
Want to Feel Rich? Shop Til You Drop...
I didn't worry about that, just started planning the trip. What route would I take? How long would it take me? Where would I stop, and who would I see? How woul...
The Unfitted Kitchen: Why Bother?
An Unfitted Kitchen is created by using independent specially designed pieces of furniture instead of cabinetry. It is probably the most misunderstood term in ...
What is Six Sigma?
Six Sigma is a highly disciplined process focused on satisfying customers by delivering nearly perfect products and services. In today's competitive market, con...
When Should You Give Up on Chasing a Woman?
When to give up on pursuing a particular woman that you are interested in.
Diabetes: So Far so Good
A study published in the 1997 issue of the Proceedings of the Fisher Institute for Medical Research showed people with type 1 diabetes who were given glyconutri...
|
Print this page