Use irrevocable beneficiary for funding education

The beneficiary of a segregated fund contract receives the funds upon death of the annuitant. Here is a way to retain indirect control over the investments by using an irrevocable beneficiary designation. A parent could set up a segregated fund contract with their child as the owner/annuitant and him/herself as the irrevocable beneficiary.

This could help parents with children entering post-secondary education. With the parent as the irrevocable beneficiary he/she would be required to sign for withdrawals; transfers of ownership; and beneficiary changes, ensuring that they remain involved in what happens to the money.

TAX ADVANTAGE: School expenses will likely offset the child’s income from the investment, there would be no attribution of income and the parent can control how much money the child gets. Please ask for our Investor Opportunities Guide for more information about irrevocable beneficiaries at ghughes@nb.aibn.com

“Big Rock Candy Mountains”

This song described a place so wonderful, yes even perfect to this kid as it played on the radio decades ago. For those who don’t recall; the song is about a place where “a bum could stay for many a day, and he won’t need any money.” Here's a verse for old time’s sake:

“In the Big Rock Candy Mountains, all the cops have wooden legs, and the bulldogs all have rubber teeth, and the hens lay soft-boiled eggs. The farmer's trees are full of fruit and the barns are full of hay. Oh I'm bound to go where there ain't no snow, where the rain don't fall, the wind don't blow in the Big Rock Candy Mountains”

So why is an investment adviser writing about some old song?

It’s part of our human nature to want an ‘ideal’ place or existence. We hope we live in a safe place where we feel protected. NEWS FLASH! I’m sorry. It ain’t always so.

We live in a wonderful free world. Our government does keep us safe. However, we also live where greed, and the pursuit of frivolous wealth is rampant. To think we live in a land of saints is naive. So when your investments look like “Big Rock Candy Mountains” where the returns just keep piling up - then look out.

Look out for the smart and powerful people who can find ways to skim off excessive profits especially when they don’t deserve them. Ted Turner, the founder of CNN was interviewed on CNN today (Nov 11, 2008) and this is one part of the interview:

CNN interviewer askedTed: “You lost $7 billion when the dot-com bubble burst after the Time Warner-AOL merger. How did you not see the dot-com bubble bursting? How did you not see that that was all built on air?

Ted Turner: Maybe I did, but I was on a board of directors and a founder, and I was concerned about the AOL merger, but we didn't know that the books were cooked. We didn't do enough due diligence.”

We little guys aren’t the only ones to not consider to the whole picture. To be honest I didn’t realize how much the books were cooked either but I was sure the dot.com stocks were built on air. I knew that bubble would burst. Whether it was ‘dot-com’ in 2002, the ‘US mortgage melt-down’ 2008 or ‘Bre-X’ or any number of other stock shocks you’ll usually find a crook or two behind the scenes.

Being gifted with a strong faith to hold me steady in normal times, and a mind that is suspicious enough to keep me wary of snakes in the wood pile has helped me keep my investment customers safe. During the two last market down-turns that saved them a decade or more of savings from being lost. God willing, I plan to keep working for another 10-15 years and hope to keep your investments safe. If you have faith that I will do that then please tell your friends to call me so I can help them also.

“Enhancing lifestyles regardless of what happens in an uncertain world.”

Gordon Hughes CFP 443-7777 or 443-RRSP www.smartchoicelife.com ghughes@nb.aibn.com

Gordon Hughes York Financial Services Inc.

My thirty year career began at the Canadian Imperial Bank of Commerce. I moved on to the credit field in private industry. In 1971 illness struck a family member so I moved back home to PEI. I started a business in fire and flood clean-up and repairs. An allergy to chemicals used in that business motivated me to sell it and returned to the financial industry.

This time I became more involved in people's lives as a financial planner, estate planner, retirement planner and investment adviser. I love it. There are so many ways to help people enhance their lifestyles no matter what happens in an uncertain world. Recently I've realized that I've got a real gift for saving people money during major systemic market failures. My clients are ready to buy back in at lower cost of shares.

This saved them years of setting aside money toward their retirement goals.

NOTE: I don't favor market timing (reacting to daily, weekly, monthly fluctuations in the market). But I also do not favor staying invested when you see a certain drop of 40% or more coming within a year or two.

Recognizing systemic flaws that cause major market declines is where I appear to excel. I moved my clients to safety in 2001 and again in 2007. They didn't lose money in 2002-2003 or during this year (2008). They sold high and will increase their wealth more now by buying low. Any questions? Post an inquiry or visit my website at www.smartchoicelife.com