Financial Planning for Children

Financial Planning for Children

DLD Quarterly Money Thoughts (July 2019) includes: Financial Planning for Children, Quarterly Investment Statements and DLD in the Community

Most of us are familiar with the RESP (Registered Education Savings Plan) where one is eligible to receive 20% ($500/year) in federal government grants when accompanied by $2500/year contribution to a lifetime maximum of $7200 in grants. For BC residents, when your child turns 6 years old, they are eligible to receive another $1200 in grants. The total lifetime contribution amount is $50,000 in lifetime contributions per child – the breakdown is as follows: $36,000 grant eligible and $14,000 non-grant eligible. You may ask why bother with the non-grant eligible portion? It’s pretty much a way to tax-shelter some savings as when it comes to withdraw the funds, it will be based on your child’s tax bracket at that time. It is also important to understand how contributions need to be made in order to maximize the annual grants – for example, one cannot put a lump-sum of $36,000 to get all the government grants at once.

Another way to save for your children is through whole life insurance – yes you read that correctly. Most children are insurable so the cost of insurance is low and there is a savings component where one can access the cash value throughout their lifetime – thus, as parents, you can contribute towards their policy, maintain ownership and control until you decide that you’d like to transfer the ownership to your child. Unlike RESPs, there are no restrictions to how the money can be used.

Lastly, as parents, our worst fear is if our child becomes critically ill. It can result in taking unpaid time off causing financial hardship. We’ve all seen our share of Go-Fund-Me pages. Assuming most children are insurable, one way to protect ourselves as parents is to put critical illness insurance in place for our kids. It’s relatively inexpensive and most importantly, when your child turns 25 year old, they will have the option to convert the policy to an adult policy without providing any medical evidence. You can also structure the policy so that you receive all your premiums back when they turn 25.

Please reach out to Dave, Kelly or Ryan if you’d like to learn more about the above strategies.

Reminder of Tax Deductions

Quarterly Investment Statements

You should be receiving your quarterly statements shortly. Please let us know if you’re interested about learning about your investment portfolios in more detail – we are happy to schedule a time to review them with you.

DLD in the Community!

If you haven’t already heard through our social media– we adopted “The Skull” bike trail on Fromme mountain. From all of us at DLD Financial Group Ltd, have a wonderful summer!