IAFP delegates tackle complex cross-border planning

(October 13, 2004) The complicated cross-border financial planning issues of a fictional family fell under the magnifying glass of RFPs attending the second annual Institute of Advanced Planners’ annual symposium last week in Kelowna, B.C. The case study approach was initiated at the IAFP’s inaugural symposium last year in Toronto.

This year’s “High Water Mark” format pitched some of the best financial planning minds in Canada against the fictional case of Robert and Janice McDermott and their children. Their many issues included cross-border income tax issues and the potential advantage of using a Retirement Compensation Arrangement (RCA) and/or an Individual Pension Plan (IPP).

The experts also looked at the issues surrounding how to use the McDermotts’ $500,000 tax-free capital gains limit, a retirement allowance for Robert and Janice, and Robert’s maturing U.S. stock options.

There was also discussion about how to bring the McDermotts’ 401(k) and IRA savings plans to Canada as well as a myriad of issues surrounding Robert’s and the children’s U.S. citizenship. In addition, having a disabled son allowed the McDermotts to consider the benefits of the preferred beneficiary election that still exists within the Canadian trust structure.

The RFPs also had to consider the pros and cons and structuring of the sale of a majority position in the McDermotts’ drug company to a U.S. firm.

The two-day symposium featured expert analysis of the McDermotts’ situation by a succession of leading experts. Benita Laughlin of KPMG International Executive Services, and Terry Ritchie of RBC Global Private Banking, spoke to the complex tax issues the family faces resolving U.S. and Canadian tax treatment of income and property.

Kelowna wills and estates lawyer Geoffrey White, a member of the Planned Lifetime Advocacy Network (PLAN), discussed the issues and various options for the estate plan of Janice and Robert in caring for their disabled son, while actuary Steven Cheng provided a clear overview of individual pension plans and gave examples of how this might work for the McDermotts.

Lawyer David Thompson discussed the options that the McDermotts have with respect to the sale of their business interests as well as the tax consequences. Mergers and acquisitions expert Dave Karnoffe gave an energetic discussion on the pitfalls of selling a business and the dynamics of obtaining the best possible price.

George McCaulley of McCane Financial at Manulife suggested solutions for the number of insurance issues facing the McDermotts and their children.

Economist Dr. David Bond provided delegates with an eye-opening survey of the factors at work in our economy as well as a sobering “fearless forecast” for 2005.

Finally, members were reminded that following the six financial planning steps and the IAFP code of ethics will steer them away from client complaints and their potential liability, according to securities consultant and expert witness, Karen Henderson, and lawyer Chilwin Cheng, who presented a discussion on bullet-proofing practices.

Michael Berton is a financial planner with Assante in Vancouver and a part-time instructor at the B.C. Institute of Technology