Raising a family
With the scent of Mother’s Day bouquets still lingering, it’s an appropriate time to reflect on family – and the considerable financial expenditure it takes to support your children’s well-being. Your financial needs are bound to be many – from providing for your children day-to-day to their recreational and future educational needs, to protecting and providing for them should you become ill, incapacitated or die, and ultimately, to ensure your heirs will receive the legacy you wish to leave them.
Do your homework
- Know the ins and outs of maternity and parental leave
Federal employment insurance (EI) does not fully cover the income lost by the spouse taking leave. Taxes deducted at source from the leave benefits may not cover your total personal income tax liability at the end of your leave. There may be income restrictions requiring you to pay back EI benefits depending on your year-end income. Self-employed individuals and those who do not pay into EI do not have leave benefits.
- Know about child care costs and tax breaks
Child care expenses are tax deductible must be claimed by the spouse with the lower income and the deductions are limited and vary by the child’s age.
- Build a safety net for your family
Protect your family with life and disability insurance in the event an accident or illness prevents you from providing for them.
Look into the future
- Education – especially post-secondary education – is expensive. Start early with a Registered Education Savings Plan (RESP) that takes full advantage of federal and provincial programs (such as the Canadian Education Savings Grant – CESG*) that provide additional funds. When they are ready to begin a post-secondary education, check out available bursaries and scholarships to offset costs.
- Begin an investment portfolio designed to save for university or college. Consider establishing a trust for your children that will provide them with income and provide you with tax benefits from income-splitting.
- Take full advantage of all post-secondary tax credits.
Will and estate planning
- When you have children, revise your will to include trustees and/or guardians for your minor children.
- Review your estate plan regularly and as your personal financial situations changes.
- Develop your estate plan in consultation with your accountant, lawyer and other professional advisors.
Children are wonderful – but they do bring with them many new needs to be met and goals to fulfill. Talk to your legal and professional advisors to get the right plan for you and yours.
*The Canada Education Savings Grant and Canada Learning Bond (CLB) are provided by the Government of Canada. CLB eligibility depends on family income levels. Some provinces make education savings grants available to their residents.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.
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