Advisors are urging more clients to consider prescribed-rate loans before the rock-bottom rate rises, possibly as early as July 1.
Laura Barclay, senior portfolio manager at TD Wealth Private Investment Counsel Inc. in Markham, Ont., says the window is closing for families to take advantage of the lower rate.Ms. Barclay says tax season is a good time to set up these loans as the number crunching can often present various income-splitting options.
She adds the loans can also be undone if needed. Once the loan is in place, the lending spouse transfers the funds to the borrowing spouse through a promissory note. The interest payments on the prescribed-rate loans are paid at least annually on or before Jan. 30, and theMs. Barclay says the strategy also works when splitting income with minor children, with the borrower being the family trust.Don’t let math mess with your CPP benefits
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