"I picked the stocks myself and it worked. So why can't I sleep?"
He built $2.38 million entirely on his own, with no advisor at any point. All of it sits in registered accounts, an RRSP and a locked-in account from an old job. He is the reason the money is there.
She is still working and winds down over the next two years. She is not the one who follows the markets. She is the one who asks what happens if something happens to him.
They live in the Greater Toronto Area. Their daughter is an adult and pays her own way, and leaving her something still matters to both of them.
He picked the stocks himself and he was right. That is not the problem.
The problem is what the government does with registered money later. Starting in his seventies it forces the money out whether he needs it or not, at high tax rates, in amounts he never chose.
Then whatever is left gets taxed at about 50% when the second of them dies. Nobody had ever put a number on that for him.
That is the tax bill waiting at the second death on the do-nothing path. It comes out of what their daughter receives, and it was completely invisible to them.
A portfolio he built himself that quietly turned into $2.38 million. Everyone told him he was doing great.
A million-dollar tax bill with his daughter's name on it, and no will to sort any of it out.
He came in asking about his stock picks. The stock picks were never the thing keeping him awake.
Left alone, the money comes out at the worst tax rates at the worst time. The plan takes it out early, on purpose, in the cheap years, pays a little more tax now, and moves it where it is never taxed again.
Every Glacier Financial plan runs through The 57-Point Plan Review. Fifty-seven specific checks across tax, insurance, investments and estate, so nothing gets missed because nobody thought to ask.
Here is what it turned up for them.
Most people assume the family home is the big estate problem. It is not, because a principal residence passes without tax. The whole bill was sitting in the $2.4 million of registered money, which is taxed as income all in one year at the second death.
$1,138,309 of it, on the do-nothing pathNearly every dollar was in a handful of US tech names, all in US dollars. That is what made the money, and it is also the single largest risk to the plan. It is the reason we built a crash scenario.
The existing $400,000 universal life policy earns its keep. It covers the now-small estate bill and the legacy for their daughter. The term coverage lapses at 65 as it was always meant to, and no new coverage is needed.
They came in spending about $65,000 a year. The plan sets it at $130,000 a year in the healthy early years, then $92,000 later, and still works. That is the part that surprised him most.
Every tax move in this plan assumes someone can act. Without those documents, a stroke or an accident stops the whole thing cold. This was the cheapest fix on the list and the most urgent.
Seven levers. Together they cut the tax bill by about $944,000.
His sixties are his cheapest tax years, because work income has mostly stopped and the government cheques have not started. We withdraw $55,000, then $56,000, then $98,000 in the first three years instead of waiting to be forced.
Ontario lets you move 50% of a locked-in account somewhere flexible when you convert it. Most people never hear about this. It frees that money up to be melted down the same way.
Waiting makes every cheque 21.6% bigger for the rest of his life. It also means less of it gets clawed back, because the forced income is lower by then.
Moving income to the lower-taxed spouse costs nothing and saves every single year. It happens on the tax return, not in the bank account.
Money taken out of the registered accounts does not go to the bank and sit there. It goes straight into TFSAs, where growth is never taxed and nothing is taxed at death.
Inside a registered account this costs nothing in tax to do. This is the single move that makes the crash scenario survivable.
Neither existed. Booked with a lawyer, with a date on it, in the action table.
Moves one, two and five are the engine. Draw the registered money early at low rates, free up the locked-in half so it can be drawn too, and land all of it inside TFSAs. That combination is what turns a $1.14 million estate tax bill into $77,000.
Path C is the one he asked for. His fear was simple. What if the market falls apart the year I stop working?
| Path | Path ADo nothing | Path B · chosenThe Plan | Path CMarkets drop 30% the year he retires |
|---|---|---|---|
| Funded status | Fully funded | Fully funded | Fully funded |
| Total tax, lifetime plus estate | $2,514,641 | $1,571,055 | $743,214 |
| Estate tax at the second death | $1,138,309 | $76,752 | $0 |
| What the family receives after tax | $5,592,013 | $5,755,103 | $2,234,007 |
| Old Age Security received | $726,368 | $817,957 | Same deferral to 68 as the plan |
| Their spending | $130,000 a year, then $92,000 | Identical | Identical |
Spending figures are in today's dollars. Estate figures are the projected value at the end of the plan, at ages 90 and 92, in the dollars of that future year. All three paths were run on the same model with the same assumptions.
He pays a bit more tax in his sixties and far less for the rest of his life. That trade is the whole plan, and it only works if it starts now.
Same lifestyle, same money, more of it landing where they wanted it to land. The estate bill drops from $1.14 million to $77,000.
If the whole portfolio drops 30% the year he retires, they are still fully funded to 90 and 92 on the same $130,000 and $92,000 lifestyle. They still leave about $2.2 million.
They were living on $65,000 a year out of habit and fear. The plan says $130,000 a year in the healthy years, and shows them the math that makes it safe.
He came in for a second opinion on his stock picks. He left with a will, a drawdown schedule, and a tax bill about $944,000 smaller.
This is the package they received. It is the same package every planning client gets.