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Not convinced. Instead, half of the briefcase contents, $200,000 in our example, are put into a box, tied up with a nice red ribbon and hand delivered to ' the Prime Minister.

Some time ago I attended a seminar where participants were told to burn some money; a reasonably-sized quantum of money. You should have heard the gnawing and gnashing of teeth in that room! Step right up, folks, and light it on fire. Come on now. It’s only money.

Some people, likely less expert at saving than others, patently rushed forward in an deal to show how money had no hold over them. There was a principle in there somewhere. Not sure what it was.

Others cowered into the corner, refused to take out their wallets, looking for the exits. It does seem reasonable to me to make way for torching cash. aft all, you’ve worked hard for it. Put in years worth of work and put off many luxuries to rise what nest egg you have. galled it would somehow seem to indicate a crack in the psyche.

But what if I told you that many people are geared right up to burn tens of thousands of dollars? Oh, they’re not going to march forward to the front of some hotel chamber and pull out stacks of cash from a baggage and toss them all onto a controlled, indoor bonfire. Nope. That’s dramatic. Their method is much harder to picture, but let’s try and create a vivid picture nonetheless.

Imagine a retired widow or widower. Or, perhaps, a senior single person. A person who is finished working, and has been enjoying the fruits of their savings. They have stacked several hundred thousand dollars in their RRSP, which has since been transferred to a RRIF. They receive income from this RRIF. Let’s say it has $400,000 in it.

Like most of us, this person does not want to think thereabout their own demise. Their focus is on their grandchildren, perhaps. Hobbies. The garden. Other things. They are, of course, surprised when they die, and even more surprised when they get a box of popcorn and a front row seat for the posthumous show named ‘distribution of your assets’.

Let’s go straight to the grand finale, shall we? In this last part of the show, the contents of the person’s RRIF are put in an over-sized briefcase, sawed in half, and one half is tossed onto the gigantic known now as the Canada Revenue Agency. Let me explain…

The proceeds of an RRSP or RRIF can roll, tax-free, to a surviving spouse without any tax consequences. In our example, however, there is no spouse to roll the proceeds to. As a result, the full stint of the RRSP or RRIF comes into income in the year of death. What happens when you get a sudden influx of cash? Say, $400,000 worth of cash? Well, first of all it will put you in the very highest tax bracket. Second, you’re taxed. (Hence the idea of just sawing that over-sized compact in half and tossing one half on the bonfire.)

Not convinced. Okay, forget the fox fire idea. Instead, half of the carton contents, $200,000 in our example, are put into a box, tied up with a nice red ribbon and hand delivered to … the Prime Minister. Like that better? Hmm.

Well, at least now you know what happens when you die. There’s a big fire. There’s gnawing and gnashing of teeth. People rushing for exits. And a few, good people, are sitting there judiciously as things go they planned ahead, or had yet gone through all of this at some weekend seminar.

Strategies do exist to prevent the erosion (torching) of your fund when you die. Talk to your financial advisor.

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