Scenario

Both Mr. and Mrs. Adamson are in their mid-40s, non-smokers, in good health. The couple have two children, both teens, one child has a disability that will prevent him from working and caring for himself for the remainder of his life.

• They earn approximately $450,000 in gross revenue per year combined
• After taxes and personal lifestyle expenses they are able to save about $100,000 per year.
• The couple have 3, personally owned rental properties, which were purchased over 5 years ago.
• The couple has accumulated close to $1,000,000 in RRSPs and TFSAs through diligent savings over a 20-year period.
• They are invested primarily in big bank mutual funds and other big bank financial products.

Their Concerns

1. They are worried about being financially ready for retirement.
2. They worry about what their  estate tax bill will be and how they can transfer their real estate to their son in a tax efficient manner.
3. They worry about their disabled son's future when they are no longer around to support him financially.
4. They do not understand their current investment portfolio at all.
5. They wanted to know the best and most tax efficient way to invest.

The JPM Partners Integrated Approach

STEP ONE: Structure a corporate owned life insurance policy.

•  Shelter corporate savings from tax and grow it by 5-6% per year.
•  Draw a tax-free retirement supplement of $100,000 per year.
•  Pay their estate a tax-free lump sum at death to cover anticipated estate taxes.

Simplify their current investments into:

• Large-cap, market leading, dividend paying stocks.
• High-quality, international managed accounts with down-side protection
• Some high-quality fixed income to manage overall risk
• Incorporate a holding company to hold corporate investments/insurance policies and segregate those assets from potential creditors.
• Preparation of two wills to bypass probate on certain assets

Based on conservative projections, we anticipated that the couple would comfortably achieve all of their financial goals, including:

• A projected retirement income of $300,000, $100,000 of which would be fully tax free.
• A smooth transfer of assets from one generation to the next.
• A substantial investment fund to provide for their disabled child.

STEP TWO: Deferring Tax.

The ultimate goal of tax planning is to minimize the overall amount that one must pay in taxes. 

You're always going to have to pay tax when money is taken out, but how about if we even out how much we're paying ourselves each year? Can we push some of those earning into a later date in our life when we're in retirement, when our personal tax bracket is lower?

By deferring some income into later years, you may be able reduce what you owe when it comes time for retirement and filing your returns...

Now this is where it gets really exciting because we get to then say, well, what are we doing with the money in the company? You can go out and you can create your own investment portfolio, you can have someone manage your money, or you can invest in Real Estate.