Estate planning isn’t just about having a will, but about having the right documents, structures, and strategies in place to preserve wealth and protect family harmony. At our most recent Cumberland Private Wealth event, our clients and special guests were treated to a deeply insightful presentation by Marni Pernica, a partner in the Estates & Trusts Group at Aird & Berlis LLP.
Known for her practical approach and cross-jurisdictional expertise, Marni took our guests through a range of strategies that can reduce tax, streamline administration, and ensure that legacy plans unfold as intended. The session was hosted by Cumberland President and CEO Charlie Sims, who facilitated an interactive Q&A following the presentation.
The first half of the discussion focused on probate planning, particularly in Ontario, where the Estate Administration Tax (EAT) can amount to $15,000 per $1 million of estate value. Probate is required when a will needs to be legally validated before assets such as bank accounts or real estate can be transferred. As Marni explained, it’s often unavoidable, but smart structuring can reduce or even eliminate its cost.
She walked through strategies such as designating beneficiaries on registered accounts and life insurance, considering joint ownership via bare trust agreements, using primary and secondary wills to separate assets that require probate from those that don’t, and looking at alter ego and joint partner trusts for individuals aged 65 and over.
Each approach comes with its own considerations and trade-offs. As Marni put it, “Estate planning is choose-your-own-adventure. It’s about knowing your options and choosing what’s right for your circumstances.”
For business owners and individuals with large private investment portfolios, Marni introduced the concept of an estate freeze, a strategy used to lock in today’s value of an asset and transfer future growth to a trust or next generation.
The benefits of an estate freeze can include minimizing capital gains tax on death by capping the growth held personally, multiplying access to the lifetime capital gains exemption through a family trust, and deferring tax while retaining control through preferred share structures.
She also addressed some often-overlooked details, such as the 21-year deemed disposition rule on trusts (which doesn’t apply to alter ego or joint partner trusts) and the growing use of refreezes to manage long-term growth.
Importantly, Marni emphasized that estate freezes must be coordinated with estate planning documents and reviewed regularly, especially when family members marry, move abroad, or inherit different types of assets.
Following the presentation, attendees raised thoughtful questions about naming non-resident executors, coordinating wills across jurisdictions, and dealing with beneficiaries who move abroad. Marni shared practical guidance on these topics, including:
She also cautioned that trust interests may be considered family property in Ontario divorce proceedings, underscoring the need for proactive legal planning when children in a trust structure are preparing to marry.
Marni closed with a reminder that estate planning isn’t a one-time exercise, but an ongoing conversation that must evolve along with your life, the family, and the law. At Cumberland, we’re committed to helping clients keep the conversation going through a thoughtful and personalized approach to wealth planning.
If you wish to see a playback of the event, learn more about estate planning, or revisit your current structure, please reach out to your Cumberland Portfolio Manager.
When it comes to US tariffs on Canada, the headlines may paint a simple picture, but the reality is far more complex. Canada is a critical trading partner that directly supports US industries, jobs, and consumers in ways that aren’t always obvious. Here are five key facts about the Canada-US trade relationship that might surprise you.
1. The US Has a Merchandise Trade Surplus with Canada (When Energy Is Excluded)
While the overall US-Canada merchandise trade balance shows a deficit, this picture is skewed by energy imports. When energy is excluded, the US actually had a merchandise trade surplus of $28.6 billion with Canada in 2023, a trend which has held since 2007¹, driven by high-value sectors like manufacturing, machinery, and automotive parts.
Why it matters: This surplus supports thousands of American jobs and highlights how interdependent the two countries are. As Cumberland Chief Investment Officer Peter Jackson has commented, energy imports heavily influence the deficit figures, but in key sectors like manufacturing, the US gains more than it loses.
2. Canadian Crude Imports Create a Win-Win Through Refining Arbitrage
Canada exports about four million barrels of crude oil to the US every day, accounting for 21% of US daily consumption². Canadian heavy crude oil flows into US refineries at a discount that can generally be estimated at $10–$20 per barrel as compared to lighter WTI crude³. US refineries process this Canadian heavy crude into gasoline and diesel, which are sold in the domestic market at competitive prices. Meanwhile, the US exports some of its own lighter crude globally at a premium.
The takeaway: As we have noted, this refining arbitrage benefits US refiners, oil producers, and consumers by keeping fuel prices low while allowing the US to profit from exports.
3. Canada Buys More US Goods Than Any Other Country
In 2023, the US exported $449 billion worth of goods and services to Canada, making it the US’s #1 export destination4. From machinery to precision instruments and aircraft, Canadian businesses are major consumers of American innovation. And it’s not just confined to border states—it’s a national relationship. In fact, 36 US states, from Michigan to Texas, rely on Canada as their #1 export destination5.
The impact: Industries across the US depend on Canadian demand, and disruptions in trade could ripple through local economies nationwide.
4. Canadian Imports Drive US Manufacturing Efficiency
Nearly 70% of US imports from Canada are used as inputs for the production of American goods6. From automotive parts to metals and chemicals, Canadian imports fuel US factories, enabling them to remain competitive globally.
Why it’s important: Tariffs on Canada could increase input costs for US manufacturers, reducing their ability to compete internationally.
5. Tariffs on Canada May Hurt US Consumers More Than Canada
Because Canadian energy and raw materials play such a large role in US supply chains, imposing high tariffs would likely lead to higher costs for American manufacturers and consumers. Tariffs on key imports, like energy and automotive parts among others, could raise production costs, making American goods less competitive globally.
It’s also critical to note that, while Canada’s overall trade imbalance with the US has increased since Trump’s first term, largely driven by higher energy prices, it is still dwarfed by the imbalances with China (close to US$300 Billion) and the Euro Area and Mexico (each around US$200 billion +/-)7.
The twist: Canada’s close trade ties create efficiencies that directly benefit the US economy. And, while Canada has been portrayed as a major contributor to the US trade deficit—in reality, it is not. Targeting it with tariffs is more about political narratives than economic necessity.
In our view, a closer look at the trade data reveals that Canada is not just another trading partner—it’s an essential economic ally to the U.S. As tariff debates unfold, acknowledging this deep interdependence could pave the way for more strategic solutions that ultimately benefit both nations.
At Cumberland, we’re closely tracking these developments to assess their impact on markets and position our portfolios accordingly. Our focus remains on helping clients navigate uncertainty while balancing attractive investment opportunities and prudent risk management.
Impact investing continues to evolve as more charitable foundations dedicate time and resources to this transformative approach. On Tuesday, November 12th, Cumberland was honoured to host members of the philanthropic community for a dynamic panel discussion featuring three leaders making strides in impact investing.
The event opened with remarks from Alex von Schroeter, Cumberland partner, who welcomed both new and familiar faces to this second Cumberland Foundations Circle event of 2024. She introduced moderator Charlie Sims, CEO of Cumberland Private Wealth Management, and the esteemed panelists:
The conversation began with Charlie asking Upkar to define impact investing. Upkar explained the “four dimensions” that his team uses in managing Rally Asset’s impact funds:
Upkar also clarified impact investing versus some of its related categories:
“There are lots of other terms like sustainable, responsible, ethical and so forth. ESG (Environmental, Social, Governance) is often integrated or confused with impact investing and, from our perspective, ESG is not the same. [With ESG], you’re looking at how the world is affecting a company, whereas impact investing is about how a company is affecting the world.”
Andrew Spence shared the Toronto Foundation’s journey toward a target of 70% impact investments by 2030. This required shifting core beliefs, rewriting the Investment Policy Statement, and engaging specialized advisors.
“We have about $100 million out of our $400 million now invested in intentional impact opportunities. They are delivering the returns they promised, and we are doing more good while getting the return.”
Andrew also addressed some of the governance challenges that can come with impact investing:
“When does an investment become a grant? If a well-deserving enterprise cannot stand on its own and you write off $300,000, how do you justify that to the person you give $10,000 a year to? We’re slowly getting that evaluation process in place, but that’s what keeps me up at night as a board member.”
Riz Ibrahim shared how The Counselling Foundation of Canada began exploring impact investing about a decade ago, and described his progress as “mid-journey.” He highlighted their breakthrough moment – providing a $200,000 loan guarantee to skilled immigrants seeking accreditation in Canada:
“We were using our balance sheet, not our asset base. It was within our wheelhouse. We understood what the impact could be, and the risk was nominal. We really liked it, and it got people thinking, ‘Okay this is something we can get into.’”
Over nearly an hour, the panelists provided invaluable insights into the purpose, strategy, and governance of impact investing and philanthropy more broadly. Their expertise inspired meaningful reflection on how foundations can maximize their resources to drive positive change.
Cumberland Foundations Circle was created to help families, foundations, professionals, and experts come together in a dynamic set of discussions to share their knowledge and experiences across an array of philanthropic topics, including impact investing.
Interested in learning more? Contact us to access a video replay of this event or to join future discussions.
Traditionally, investing focuses on profit and charity is about improving the human condition and world. Impact investing can be likened to a hybrid way of giving that aims to generate positive social and environmental impacts with financial returns simultaneously.
Impact Investing Versus Charitable Giving
One way to compare impact investing with more traditional charitable giving is to imagine how you might assist a community organization that needs physical space to sustain its highly successful outreach program.
With traditional charitable giving, a donor might provide cash that the organization could use to lease space. With impact investing, a donor might instead purchase or even construct a building and allow the organization to occupy the space it needs for free or at a below-market rate. In this way, the impact investor benefits from owning the real estate asset while supporting the community at the same time.
Interest in impact investing has surged across institutional investors, family offices, and individual investors, spurred by growing recognition that it’s possible and desirable to make a positive difference without sacrificing returns.
Social Impact With a Financial Return
Impact investing often funds scalable solutions with long-term potential. This could be anything from a real estate project as in the above example to a business that provides social or environmental goods in a sustainable manner. Since impact investing may not offer the same immediate financial support as charitable giving, many philanthropists combine both approaches to maximize their impact.
Impact investments span a wide range of asset classes, from private equity and venture capital to fixed income and more, allowing investors to diversify their portfolios and align their values with their financial objectives. Many impact investments target a rate of return similar to the market, although some are structured to accept lower returns if it leads to a high level of positive impact.
Impact Investing Frameworks
The UN Sustainable Development Goals have provided a global framework for impact investing by outlining specific goals related to issues such as poverty, hunger, clean water, education, gender equality, and climate action. Many impact investors reference these goals as a way to shape their strategies and share a common language with other impact investors.
There are also frameworks for measuring outcomes, including the Global Impact Investing Network standards and the Impact Reporting and Investment Standards. These standards help investors avoid “greenwashing,” where companies may falsely claim sustainability efforts without substantiating them.
Join Us to Learn More
Cumberland Foundations Circle was created to help families, foundations, professionals, and experts come together in a dynamic set of discussions to share their knowledge and experiences across an array of philanthropic topics, including impact investing.
Our next event takes place in Toronto on Tuesday, November 12th and will feature a panel of experts on impact investing who will share their insights and discuss the issues of the day. Please contact us if you and/ or your foundation are interested in attending the event, or accessing a replay after the event.
Is artificial intelligence (AI) the disruptor we thought it would be? Last year, we hosted a discussion with AI specialist Barbara Gray, CFA of Brady Capital Research on its potential impact. Since then, AI-driven tools, public experimentation and investment have continued to grow rapidly. On September 20, 2024, Barbara rejoined our team and our invited guests to share her latest outlook on this evolving space.
Following an introduction by Alex von Schroeter, partner on the Cumberland leadership team, our Chief Investment Officer, Peter Jackson, took the podium to lead the conversation with Barbara, who was joined on stage by two members of the Cumberland investment team, Levon Barker, Portfolio Manager, US Equities, and Phil D’Iorio, Portfolio Manager, Global Equities.
Barbara fielded the first question by walking the audience through some of the main points from her eleventh book, Secrets of AI, published last year.
Barbara laid out a convincing case for the disruption already underway and yet to come as a result of AI technology. She shared the following eight “secrets” of this disruption:
Next up, Levon and Phil answered a series of questions about how to approach AI from an investment perspective. Here are a few highlights from their comments:
The panel fielded a variety of questions from the moderator and the audience, addressing the accelerating rate of change in the space, the need for regulators to try to keep pace, the industries that may be most vulnerable to disruption, the potential trajectory of earnings growth among today’s leading technology stocks, and Cumberland’s approach to making investment decisions in such an environment.
All three panelists expressed optimism about the economic prospects for AI, while Barbara shared some concerns about the level of uncertainty that can accompany such a profound technological innovation, particularly as a parent to two young boys. One theme that emerged was the potential for AI-driven productivity gains to spur economic prosperity across companies and sectors well beyond the tech industry itself.
A lively conversation followed as guests and panelists mixed and mingled on our patio overlooking Yorkville on a mild September evening. If you have any questions about our approach to investing in the age of AI or would like access to a video replay of the event, please contact your Cumberland Portfolio Manager or Alexandra von Schroeter at [email protected].
On June 6, 2024, Cumberland hosted a webinar on a proposal in the last Federal Budget that would see the capital gains tax inclusion rate rise from 50% to 66.67%. A few days later, the government tabled legislation in Parliament to be voted into law. Here are some of the highlights.
Following an introduction by Cumberland partner and CEO, Charlie Sims, the discussion was kicked off by Peter Routly, CPA, CA; TEP, a Partner in the Canadian Tax practice at BDO who was in Ottawa for the unveiling of the budget.
He started by illustrating the impact of the higher inclusion rate using the example of someone who sold a stock for $100 that had originally been purchased for $10, thus realizing a capital gain of $90. Under the current rules, they would only add half of the gain, or $45, to their personal taxable income. Under the new rules, they would owe tax on two-thirds of the gain, or $60. For investors in Ontario’s top tax bracket, this equates to an 8.92% tax increase on capital gains.
He also outlined an important distinction: for individual tax filers, the higher capital gains tax inclusion rate is only applied to capital gains in excess of $250,000 in a given year, but for corporations and trusts, the higher rate is applied from the first dollar of capital gains.
Mr. Routly provided an overview of some of the main considerations for those seeking to mitigate the financial impact of the higher tax, including:
For many Canadians, selling capital assets before the deadline to take advantage of the 50% capital gains inclusion rate before it’s gone may have been the most straightforward tax mitigation strategy, and Mr. Routly outlined some key questions to help assess the potential appropriateness of this strategy:
It was suggested that, for many investors with significant private business interests and other valuable assets, the cost of selling before the rule change was not justified by the expected tax savings.
With so many issues to consider and the complexity of each individual situation, Mr. Routly said that it’s difficult to make blanket recommendations, and that each tax payer must conduct their own analysis along with their tax, legal and wealth advisors.
Following Mr. Routly’s overview of the proposed tax, he was joined by Jeff Noble, CMC; FEW Director of Business & Wealth Transition Private Wealth at BDO for an in-depth Q&A session with Charlie and the webinar participants.
Some of the many topics covered included:
If you have any questions about your personal tax planning situation or would like access to a video replay of the webinar, please contact your Cumberland Portfolio Manager or Financial Advisor.
The Canada Revenue Agency (CRA) will no longer require bare trusts to file a T3 Income Tax and Information Return (T3 return), including Schedule 15 (Beneficial Ownership Information of a Trust), unless they directly request these filings from an individual taxpayer.
This policy change was made to recognize that the new Bare Trust tax reporting requirements, which were only recently introduced for the 2023 tax year, would have had an onerous and unintended impact on many Canadians.
Over the coming months, the CRA will work with the Department of Finance to further clarify its guidance on this filing requirement. The CRA will communicate with Canadians as further information becomes available.
What is a Bare Trust?
A Bare Trustee corporation acts as the title holder to an asset for the benefit of someone else, such as holding the title to investments in a nominee corporation. This arrangement is often used in real estate development and oil and gas and resource exploration, but it is also used by many Canadian families for general estate and probate planning purposes.
Here are some examples of Bare Trusts that, until the recent policy reversal, would have required taxpayers to submit additional annual filings:
The above is not an exhaustive list, and legal counsel should be consulted to identify all informal trust arrangements and instances of a Bare Trust that may be subject to new tax reporting policies in the future.
Contact your Portfolio Manager
For now, the Bare Trust annual tax filing requirement is lifted for the 2023 tax year, and we will continue to monitor the situation for our clients. If you have any questions about Bare Trusts and how they might affect your tax, financial, and estate planning, please contact your Cumberland Portfolio Manager.
Many of us avoid discussing financial or health matters with our parents because these conversations can be uncomfortable. However, we believe they are often necessary to protect our parents’ personal and financial well-being.
Here are four specific topics that we recommend discussing with aging parents sooner rather than later, while they still have the physical and mental capacity to put the appropriate protective measures in place:
Name a Power of Attorney. Ensure that each of your parents has a financial Power of Attorney (“POA”) drawn up by a lawyer. This can usually be completed alongside their Will. The POA lets them appoint someone to have either limited or general authority to act on their behalf in financial matters if they are unable to effectively act on their own. The exact method of invoking the POA is specified in the document itself, but it usually involves a letter of opinion from a healthcare professional such as a family doctor or geriatric psychiatrist. The POA must be signed while your parent still has full cognitive capacity, so don’t delay or you may risk facing legal costs and delays.
Name an Attorney for Personal Care. Your parents should name an Attorney for Personal Care who is authorized to make decisions about their personal care in case they become incapable due to illness or injury. Your parents can spell out their specific wishes, such as whether they wish to be resuscitated in the event of a serious medical event, and if a situation arises that is not spelled out in their wishes, then the Attorney for Personal Care has a duty to act in their best interest.
Keep a “Green Sleeve” somewhere accessible. In Alberta, there is a campaign asking elder citizens to place their medical directives and other important information in a green folder on top of their refrigerator so that first responders will know where to find it in an emergency. Although there is no equivalent program in Ontario, you can still follow the spirit of this program by having your parents store copies of their Wills, Powers of Attorneys, medical contacts, and other critical information in a safe place that you can access if needed.
Appoint a Trusted Contact Person on their financial accounts. A Trusted Contact Person (TCP) is a simple safeguard to protect your parents from potential financial exploitation. A TCP does not have the authority to make any investment decisions or financial transactions, but rather is someone that their bank or financial advisor can contact if they detect any unusual behavior that could suggest impaired decision making or fraud, or if they are unable to get in touch with your parents for any reason. It is often suggested that the TCP be a different person than the one named as their POA.
At Cumberland, we believe in holistic wealth management that addresses health, wealth and also family dynamics. Having these recommended elements in place ahead of time will help your parents feel more prepared and in control and can provide clarity for you when it is needed most. If you have any questions or would like professional assistance with these four conversations, please get in touch with us.
With billions of dollars set to transition from Baby Boomers to their children and grandchildren in the coming years, many younger Canadians will grapple with the impact of an inheritance. While the impact will be mostly positive – more money that they can put towards goals such as home ownership and retirement – there is also a degree of pressure to avoid costly mistakes.
Here’s a look at some of the key changes that come with inheriting money, and how they can help you realize, protect and enhance your best life.
The first fundamental wealth management step is realizing your goals. This requires you to define what you want out of life and set out intentionally to achieve it. When you inherit money, here are some of the areas of your wealth management plan that may need to be adjusted:
Revisit your goals. An inheritance can alter your goals for a number of reasons, including how it changes your personal perspective and how it changes your financial means. Before making any drastic changes to your investments, spend some time thinking about what you are truly aiming for.
Diversify your investments. An inheritance could allow you to consider new diversification strategies. For example, you might want to shift the proportion of your portfolio that it is geared towards creating regular income versus generating long-term growth. You might also wish to add alternative investment strategies or a new investment manager to the mix.
Update your risk profile. Your inheritance may have a material impact on the amount of risk that you need or are willing to take. For example, you may be in a position to reduce risk if you no longer require as much growth to reach your goals. Alternatively, you may have new goals that push your time horizon out to future generations, and you may be willing to increase risk in service of achieving greater long-term returns.
Review your investment taxation. A final consideration is reviewing if your inheritance changes the taxation of your investments. Most of your current investment assets may be in registered accounts such as RRSPs or TFSAs that avoid annual taxation. Your inheritance may require you to invest outside of these tax-preferred accounts, leading to new forms of taxable income to manage.
The second fundamental step of wealth management is protecting what you have built. This requires you to put guardrails in place to manage the risks that can impact your financial assets. Here are some key considerations:
Review your will and estate plan. If you have not created or updated your estate plan, make this a priority. Without one, the administration of your estate will be in the hands of the government, causing delays, costs, possible challenges, and the potential to sow the seeds of family dysfunction. Make sure your will, powers of attorney, account beneficiaries, and choice of executor are accurate, up-to-date, and consistent with your wishes.
Assess your tax situation. Your inheritance will no doubt be a positive for your financial position, but it will very likely increase the amount you send to the tax man each year. Potential tax implications to consider are being pushed into a higher tax bracket, possibly impacting your ability to collect Old Age Security. Potential workarounds include sheltering some of your inheritance via RRSP or TFSA contributions, considering charitable giving opportunities, and exploring legal structures such as family trusts.
Update your insurance coverage. Insurance allows you to transfer the financial risk of dying early, being diagnosed with a serious illness, or becoming disabled and losing the ability to earn an income. An inheritance can increase your financial resources and make you less vulnerable to these risks. When that happens, you may want to reassess the suitability of your current coverage or consider new insurance strategies.
Once you have checked all the critical boxes like paying down debt, investing wisely, and protecting what you have built, it’s time to think about strategies that can create a richer life for you, your loved ones and your community. Here are some ideas:
Update your spending. A rather fun way an inheritance can enhance your life is by allowing you to spend more! This could mean more dinners out and more travel. It could mean achieving your bucket list, taking up a new hobby or educational pursuit, or spending more on your interests and passions. A word of caution though: make sure to stress test any new spending to make sure your primary objectives are not being sacrificed.
Define your philanthropic approach. You may wish to use your inheritance to support causes that are important to you or the individual from whom you received the inheritance. Philanthropic initiatives can take the form of individual or annual donations, and can be structured through the creation of a Donor Advised Fund or a foundation to create a lasting legacy of giving.
Support younger generations. You may wish to use your inheritance to help your children or other younger family members. There are lots of options to consider, including tax-advantaged investment strategies to fund a first home or post-secondary education, strategically supporting business ventures, and even insurance strategies that can be started when children are young.
Inheriting money can transform how you realize, protect, and enhance your financial life. It could wipe out debts, transform how you invest, reduce or eliminate your need for insurance, expose you to more tax, open up opportunities for your kids or grandkids, and give you new choices around things like spending, charity, and how you live your life.
At Cumberland Private Wealth, we help families navigate these changes and come out further ahead. Every situation is unique, so a good first step would be to sit down with one of our Portfolio Managers to discuss where you are in the process and where you want to be. We look forward to meeting you.
A Registered Retirement Savings Plan (RRSP) is a great way to accumulate tax-deferred investments. When you turn 71 years of age, it’s time to convert those investments into a source of retirement income. Here’s what you need to know.
Over your working life, an RRSP offers you a tremendous tax advantage: every dollar you contribute is tax-deductible, and every dollar you earn is tax-free until you eventually withdraw the money.
During the year in which you turn 71, you are required to convert your RRSP into a Registered Retirement Income Fund (RRIF), which effectively reverses its function. While the assets inside your RRIF are still allowed to grow on a tax-deferred basis, no more tax-deductible contributions can be made, and fully-taxable withdrawals must begin.
Your first RRIF withdrawal is required in the year after you turn 71, and is equal to 5.28% of the fair market value of your account at the start of the year. This percentage is set by the federal government and gradually increases as you age, surpassing 10% by age 88 and peaking at 20% for age 95 and beyond.
For example, if you turn 71 in 2024, you’d use the value of your RRIF on December 31, 2024 to calculate your minimum withdrawal for 2025. If your account was worth $1 million on that date, you’d be required to withdraw $52,800 ($1 million x 5.28%) in 2025.
If you are turning 71 this year, it’s a good time to sit down with your Cumberland Private Wealth advisor. We can help you convert your RRSP to a RRIF before the end of the year. We can also look at whether it makes sense to adjust your portfolio as you shift from accumulating savings to drawing income, and how best to use that income from a tax and cash flow perspective.
Your RRIF conversion year is also the perfect time for us to review your overall financial plan and estate plan, update your goals, and make sure that you are still on track for the financial future that you envision.