Written by Ron Cooke, President & Founder of Strategic Wealth Protection Partners in Ontario, CEA®, Member of the Estate Planning Council Canada
Helen* came to me looking for guidance after deciding she wanted to help her daughter Susan* through a difficult period following a divorce.
Susan needed assistance purchasing a new home, while Helen’s other daughter, Alice*, was financially secure and did not require any financial support. Helen wanted to help Susan now but also wanted to ensure both daughters would ultimately be treated fairly.
Summary of Key Points
- Challenge: An Ontario mother wanted to provide one daughter with a $300,000 gift after a divorce while ensuring both daughters would ultimately receive a fair inheritance.
- Strategy: An Immediate Financing Arrangement (IFA) combined with permanent life insurance was used to create tax-efficient estate liquidity while allowing the mother to retain access to capital.
- Additional Planning: The estate plan projected future tax liabilities, accommodated one daughter’s wish to inherit the family home, and balanced the overall inheritance between both children.
- Outcome: The strategy was projected to create more than $1.5 million in additional tax-free wealth, increasing each daughter’s projected inheritance by more than $750,000.
- Key Lesson: Estate planning can help families support children with different financial needs during life while preserving fairness and maximizing the wealth passed to the next generation.
The Problem
Helen’s estate consisted of a $1.8 million RRIF, a home worth approximately $1.5 million with a rented basement apartment, and a non-registered investment portfolio valued at approximately $1.3 million. She wanted to gift Susan $300,000 from her investment portfolio immediately.
After reviewing her estate, we estimated that taxes at death could exceed $1.5 million, significantly reducing what would ultimately pass to her daughters. Alice had also expressed an interest in inheriting the family home, making it important to carefully balance the future inheritances.
The Solution
I helped Helen review several planning options and project the long-term impact of each strategy.
The plan included:
- Gifting $300,000 from her investment portfolio to Susan during her lifetime.
- Calculating the projected estate tax liability and future inheritances.
- Structuring the estate to allow Alice to inherit the family home.
- Implementing a permanent life insurance policy using an Immediate Financing Arrangement (IFA).
- Using the policy as collateral to obtain financing, allowing Helen to maintain access to capital while creating a significantly larger tax-free benefit for her estate.
The Outcome
By repositioning a portion of assets that Helen did not currently need, the IFA strategy was projected to create more than $1.5 million of additional tax-free wealth for her estate.
This increased the inheritance available to each daughter by over $750,000 while allowing Helen to help Susan immediately and maintain flexibility over her remaining assets.
*Names and identifying details have been changed to protect the privacy of SWPP’s clients.
Optimize Your Wealth with the Right Life Insurance Strategy
Are you using life insurance as part of your wealth strategy, or just as basic coverage?
For many Ontario families, permanent life insurance can do far more than provide a payout. When structured properly, it can reduce taxes and help transfer wealth more efficiently to the next generation.
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For high-income earners, business owners, and real estate investors, the biggest risk isn’t a lack of growth.
It’s taxation.
Without proper planning, a large portion of your estate will be lost to taxes, fees, and forced asset sales. Life insurance can help offset these costs and preserve more of your wealth for your family. But only if it’s used correctly.
But not every strategy is right for every situation.
That’s where SWPP comes in.
We design life insurance strategies as part of a complete estate plan, so every decision supports your long-term goals, not just a product recommendation. And if life insurance isn’t the right move, we’ll tell you.
We’ll show you all the wealth preservation options that apply to your exact situation, including living trusts, estate freezes, and life insurance.
Discover how to reduce and avoid taxes and leave a rock-solid legacy for the ones you love.
Read More
If you’re considering life insurance for estate planning, you may find these articles helpful:
- How much life insurance do I need at 60 in Canada?
- How much is a $2 million whole life insurance per month in Canada?
- Is It Worth Buying Universal Life Insurance in Canada?
About the Author
RON COOKE, PRESIDENT & FOUNDER OF STRATEGIC WEALTH PROTECTION PARTNERS
With over 30 years in financial services, I’ve seen the challenges families face when a loved one passes—lost assets, unnecessary taxes, and emotional stress. That’s why I created the Living Estate Plan, a comprehensive process to protect assets, eliminate estate and probate fees, and create legacies that are remembered for many years to come.
This plan ensures your family receives not just your wealth, but a meaningful reminder of your care and love. Tools like The Final Word Journal capture your story, wishes, and essential details, offering clarity and comfort during difficult times.
Your final gift should be more than money—it should be peace of mind, cherished memories, and an organized estate.
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