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Infinite Banking in West Vancouver

Some households reach a point where the children are provided for and there is still a surplus. That is a different problem from the one this subject usually addresses, and it has better tools.

The North Shore

West Vancouver runs along the north side of Burrard Inlet from the Lions Gate Bridge west to Horseshoe Bay, with Ambleside and Dundarave on the waterfront and the British Properties climbing the slope behind. Cypress is above it, Lighthouse Park holds old-growth on the point, and the district has among the highest median household incomes in the country.

That produces households facing a question most material on this subject never reaches: not how to build an estate, but what to do with one that is already larger than the family needs.

What death actually costs an estate here

Canada has no estate tax. It has a deemed disposition: on death, capital property is treated as sold at fair market value and the accrued gain is taxed in the final return. The principal residence is generally exempt. A recreational property, a rental, a portfolio of securities and a private company are not.

For a household holding assets bought decades ago, the bill can be substantial and it falls due while the value sits in things the family may not want to sell quickly. That is the genuine liquidity problem, and life insurance has answered it for a long time. Note what that is: an insurance need with a calculable amount, not a case for the strategy this site describes. An honest practitioner will tell you which of the two you have.

Get the number before anything else. An accountant can estimate what the deemed disposition would cost today. Many households discover it is smaller than feared, and some discover it is much larger. Either way the estimate, not the sales presentation, is what should drive the decision.

Giving, and the part people do not know

Where a surplus genuinely exists, charitable giving is often the better answer, and the tax treatment at death is more generous than most people expect.

A donation made by will produces a receipt the estate can use, and the rules allow considerable flexibility in which return claims it. Donating publicly traded securities directly, rather than selling them and donating the cash, eliminates the capital gains inclusion on the donated shares while still producing a receipt for full fair market value. That is the single most useful thing in this section, and a great many people sell first and donate second, which costs them money for no reason.

A life insurance policy can also be given. Naming a registered charity as beneficiary produces a donation receipt for the estate on the death benefit. Alternatively, transferring ownership of a policy to a charity during life produces receipts for the premiums paid thereafter. The two routes have different tax consequences in different years and the right one depends on your income now against your estate later.

All of this is accountant and lawyer work. The rules on donation limits, carry-forward and which return may claim a gift are specific, and this page is not the place to rely on.

Where the strategy on this site fits

Honestly, it is often the least interesting option for a household in this position. Its advantages are tax-sheltered accumulation and access to capital, and a household with surplus and existing liquidity has both already. Cash surrender value stays below cumulative premiums for many years, commonly more than a decade. Dividends are not guaranteed: they are declared annually by the insurer's board based on the participating account's experience, and the scale can be revised downward.

British Columbia rules

Insurance in British Columbia is regulated by the Insurance Council of British Columbia, and a professional here holds a Life Insurance Agent licence. Verify it in the Council's public register. British Columbia has no title protection statute of the kind Ontario, Quebec and New Brunswick have enacted, which matters more at this level of assets, not less: ask directly how the person is paid and what they are licensed to advise on.

Nothing on this page is advice, and nothing on it is legal or tax advice about estates or charitable giving. No assessment has been made of anyone reading it, and the author is not a neutral party: he is licensed to sell the contracts this strategy uses and is paid a commission when one is placed. Start with the deemed disposition estimate. It is one meeting and it reframes everything else.

One closing word on telling adult children what you intend. A contested estate costs more in fees and in relationships than it will ever cost in tax, and the usual cause is not greed but surprise. Saying what you plan, even without figures, removes that surprise.