Burlington: The Second Death, Not the First

The first death is not the event your money has been arranged around. When one of a married couple dies, most of what the household owns generally passes to the survivor and very little changes. The arrangements were built for that.

This page is written for the household where the mortgage is finished, the working income has stopped or is about to, and the savings sit inside registered accounts rather than in anything that can be spent on a Tuesday.

Every client relationship, every piece of advice and every insurance product comes through Canadian Wealth Creation Centre Inc. and its duly certified representatives. IBC Financial is the education platform and trade name. It holds no licence, distributes nothing, and gives no individualised advice.

Where the money goes when the house is paid for

A household of this kind has largely stopped financing things, which is usually presented as the end of the story and is closer to the middle of it.

The mortgage is discharged and the cars are owned. What remains is a property, a pair of registered accounts, some money outside them, and a set of obligations nobody has counted because none of them falls due this year.

The monthly figure that organised thirty years has gone, and nothing has replaced it. There is no payment to look at, so there is nothing to prompt the question.

Our mission is to help Canadians be wealthy, which for this reader means keeping what has already been accumulated rather than accumulating more of it.

The question a settled household is never asked

What has to be settled on the day the second of you dies, and out of what?

Nobody around the file is engaged to ask it. An investment statement reports a balance. A will says who receives what. Neither says what has to be dealt with first, or where the money to deal with it comes from.

So it is answered by an executor, years later, under time pressure, and the answer is usually to sell something in the month it is least convenient to be selling anything.

Households that do ask it decide differently. Not because a cleverer product appeared, but because a large balance and no liquidity on the day is one position rather than two.

Infinite Financial Sovereignty®, in plain words

Infinite Financial Sovereignty® is a registered trademark of Jose Salloum, and it is this practice's name for one idea pursued with discipline over a lifetime: that a household should be its own source of capital rather than a borrower of somebody else's.

The underlying approach is the one Nelson Nash set out in his book and named The Infinite Banking Concept®, a registered trademark of Infinite Banking Concepts, LLC. Naming the author is not decoration. It is whose idea this is.

In practice it means holding capital where it keeps working while it is used. A participating whole life contract issued by a federally regulated insurer accumulates a contractual value. When capital is needed, an advance is taken against the contract rather than from a lender.

Repayment runs on a schedule the owner sets rather than one imposed as a condition of approval, and the contract continues to work while the advance is outstanding.

None of it is free or quick. The insurer charges interest on an advance. Costs fall heaviest in the early years. Participating dividends are declared annually at the insurer's discretion and are never guaranteed. It rewards decades and punishes impatience.

What it looks like in a Burlington household

A retired couple near the lake owns the house outright and holds everything else inside registered accounts, and has never been told what those accounts do at the second death.

A widow four years on discovers the plan was written for the first death. Everything passed to her as intended, and nothing at all was arranged for what happens after that.

Two parents helped one child with a deposit and the other with nothing yet, and both children assume the balance will be evened up later. Nothing about that assumption is written down.

A family expects to keep a second property that only one of three children has ever used, and nobody has said out loud who will pay what to keep it.

None of these people made a mistake. They were advised competently on the questions they asked, and nobody was engaged to ask about the second death.

Why almost nothing happens at the first death

A married household is arranged so that the first death changes as little as possible, and in most cases it does exactly what it was built to do.

Assets held jointly generally continue in the survivor's hands. Registered holdings with a spouse named can generally pass to that spouse under rules set federally, and this page states that those rules exist rather than how they apply to you.

So the survivor keeps the house, the accounts and the routine. The income falls, sometimes considerably, but the balance sheet stays broadly intact and the family concludes that the planning worked.

That conclusion is the trap. Nothing was solved. It was deferred, to an event that has no surviving spouse left to defer it to.

The bill that arrives at the second

At the second death there is no survivor to pass anything to, and the whole of the estate reaches its conclusion at one time.

Two things happen together. Registered holdings are brought into account under the federal rules in a way your accountant will work out from your own statements, and whatever passes through the estate is administered, with the provincial charge calculated on the value that passes through it.

Both of those fall due in money. The estate does not hold money. It holds a house, some accounts and a second property, which is a balance sheet that is large and slow at the same time.

That mismatch is the subject of this page. It is a funding question rather than a growth one, and the sizing question is what will be owed and whether cash will exist to meet it.

Registered accounts, and why they are not cash

A registered account is a balance with a rule attached, and the rule is federal, long standing and no surprise to anybody who has read it.

Through retirement the household draws in measured amounts across many years. At the second death the rules bring what remains into account in a single year instead, which is a different exercise from the one the household grew used to, and retirement planning sets out how the pieces fit.

Nothing here is tax advice and none of it should be treated as though it were. The calculation depends on your own holdings, it belongs to your own accountant, and this page states no rate, threshold or figure.

What a page can usefully say is the shape. A lifetime of careful deferral concentrates into one settlement, measured against holdings whose value on that day nobody can know in advance.

A date nobody can choose

Every other obligation this household has met came with a date somebody chose. This one does not.

A deemed disposition is triggered by a death rather than by a decision. The market on that date is whatever it is, the property market on that date is whatever it is, and the family has no say in either.

So the usual answer is to sell under time pressure, which is the condition in which a house, a second property and a portfolio all sell worst, and frequently all three at once.

Capital arriving quickly and outside the estate interrupts that sequence. Proceeds paid to a named beneficiary go to that person directly rather than waiting on an administration, which is why a designation matters more than most households have been told.

The adult children question, and what was never written down

Support given during life and expectations held about what comes after it are two halves of one conversation almost nobody has had.

Help given during life is rarely recorded. A deposit for one, tuition for another, a car, a difficult year covered quietly. Each was a kindness at the time and none of it was written anywhere.

Expectations then form without being stated. One child reads the earlier help as an advance against a share. Another reads it as a gift. Both are reasonable readings of a document that does not exist.

Property makes it sharper. A house or a second property cannot be divided the way an account can, and where one child expects to keep it and another does not, an equal share on paper produces an unequal one in fact.

Write it down while everybody can still ask you about it. Estate planning sets out how the instruments fit together, and the drafting belongs with an Ontario estates lawyer rather than with any page here.

Who it suits here, and who it does not

It suits a household with durable surplus, meaning a normal year that produces more than it spends, and will keep doing so after the income has changed shape.

It does not suit a household without that surplus, nor anybody who might need the money back within a few years, because an early exit is a permanent loss rather than a poor return.

It does not suit a household that has not had the estate arithmetic done. That comes first, with an accountant and a lawyer, and reversing the order would be selling rather than advising.

It does not suit somebody shopping on rate of return. Judged that way it usually compares poorly against a market portfolio, and the objections and the risks say so here in our own words.

Age and health decide what is available at all, which is the part most pages leave out. For some readers here the answer is that nothing can be arranged, and hearing that in half an hour costs nothing.

What does not differ, whatever you have been told

The contract itself. A participating whole life policy from a federally regulated insurer works the same in Burlington as in Moncton. The guaranteed schedule, the advance provisions and the non-forfeiture options are not local.

The Income Tax Act is federal. The exempt test, the adjusted cost basis and the treatment of proceeds received by a named beneficiary are national.

The mechanics of the contract are national too. How a policy actually works sets out the value, the advance and the paid-up additions in plain terms, and none of it changes with a postal code.

Assuris covers Canadian policyholders within published limits. It is not a government guarantee. The guarantees in a contract are the obligations of the issuing insurer first.

So be sceptical of anybody offering a Burlington product. There is no such thing, and the offer tells you what kind of firm is making it.

The Ontario rules are on the Ontario page, not this one

Burlington sits in Ontario, and the provincial layer is answered in full elsewhere rather than repeated here in a thinner and less useful form.

The regulator, the two advisor titles restricted by statute, and the tax calculated on the value of an estate are provincial, so they read identically in Burlington, in Aldershot and in Kenora.

The Ontario page carries them, including how to check a licence in the public register at no cost, and why that estate charge is described there by its mechanism rather than by a figure that would go quietly out of date.

Read it once and come back. Nothing on it changes because a household lives at the head of the lake, and the other cities are listed together for the same reason.

Burlington specifically, rather than Ontario generally

The difference is the reader, not the law.

This is an established place with an older population. Long tenure in the same house, careers that finished with a plan behind them, and a large share of households where the accumulating is done and the settling has not been thought about.

That single fact reorders every question. For a younger household the first risk is an income that stops too early. Here the income has already stopped on purpose, and the risk is an obligation that arrives at once against holdings that move slowly.

It also changes what a good answer sounds like. For many readers here the right answer is to have an accountant produce the number, correct the contingent designations and do nothing else at all, which is not a sentence this industry is usually paid to say.

A neighbouring city page with the name swapped would be worthless, which is why the page for a household holding pay it has not yet received is Oakville, and the page for money that never leaves a private corporation is Markham.

The order to do it in

Ask an accountant what the second death produces, using your own statements rather than a rule of thumb. It is one meeting and it converts an anxiety into a number.

Then check who is named on every contract you hold, primary and above all contingent, including anything left over from a former employer. The insurer pays whoever is named rather than whoever was intended.

Then read the will beside the designations. They are separate documents, they can contradict one another, and the household usually assumes the will is the final word.

Then say out loud what has already been given and what is intended, and have a lawyer put it in the instruments. Where registered room is used, it should be funded from capital the household already controls rather than from cash that never comes back.

Three of those four cost nothing and earn nobody a commission, which is worth knowing about the order in which they are usually suggested.

Questions worth asking in a Burlington meeting

What is owed on the day the second of us dies, and out of which asset?

Who is named on every policy and every account, primary and contingent?

Does the will agree with the designations, and who has checked?

What have we already given to one child that the others do not know about?

What does the guaranteed column show on its own, without the dividend column beside it?

Five questions, none of them technical, and the first four are about your own documents rather than about any product at all.

The summary, if you read nothing else

The event your money is exposed to is the second death, not the first. The first is arranged for and generally passes quietly. The second settles everything at once and asks for money the estate does not hold.

The question is not which product to buy. It is who performs the financing function in the household, and whether that could be the household itself.

Three things sit on this file that are absent from a younger one: an obligation with no chosen date, holdings that are large and slow at the same time, and a conversation with adult children that has never been written down.

Two of the three can be started this week for nothing. Confirm the contingent designations and book the meeting with your accountant, and do both before anybody prepares anything for you.

Then find out whether this belongs in your situation. Half an hour, no cost, and an honest answer either way.

What happens in the thirty minutes

We ask what the household owns and how quickly each part of it moves. The house, the accounts, a second property, and what could be turned into money in a week.

We ask what has already been promised. Not a document, but the help given, the expectations formed and the things everybody assumes and nobody has said.

We look at whether there is durable surplus. Not a strong year in the markets. A normal one, because a commitment sized against a good year is a commitment that fails in a thin one.

We tell you plainly whether this belongs in your situation. Where the answer is to correct the designations and stop there, the matter ends there and you have gained an answer nobody was paid to give you.

It costs nothing. Book a conversation, or read the cornerstone guide first if you would rather arrive already knowing the subject.