Digital Assets

Estate planning has changed over the years and now should include your digital assets and reference to them should be included in your will. Remember not to include too many details (e.g. passwords) as after your death, your will becomes a public document.

 

What is a digital asset? It is any information about you or created by you that exists in electronic form. This information can be stored in:

• hardware (computers, tablets, smart phones, hard drives, flash drives,...)
• cloud (stored on your devices or in the cloud)
• e-mail
• websites
• social media accounts
• PayPal
• Banking (accounts and credit cards)

These assets include both personal and business ones.

 

What steps do you need to take?

1. The first step is to download this form to use as a guide to document all of your digital assets.
2. Then make a list that includes how to access them (where they are as well as passwords). Remember this list changes, so it will need to be updated regularly.
3. Decide what you want done with each item. Should it be disabled (e.g. Facebook); should the assets be distributed (e.g. family photos and the value in your Tim Hortons card); should someone else have access (e.g. bank accounts).
4. Decide who you want to handle these assets on your behalf.
5. Talk to your lawyer. Remember to include instructions in case you are unable to take care of them during your lifetime as well as after your death.
6. Store the information in a secure place.
7. Finally - this information should be reviewed annually as it changes more frequently than physical assets (at least mine do).

Good luck with your planning.

New Estate Information Return

Ontario releases new Estate Information Return

Effective January 1, 2015, estate trustees (i.e., executors) in Ontario have additional duties, with Ontario’s release of its Estate Information Return.   Part of the probate process, this new return must be filed within 90 calendar days after a certificate of appointment of estate trustee is issued.  This return is not required where an application for probate was made prior to January 1, 2015.

On the Estate Information Return, the estate trustee will need to provide information on the Fair Market Value of the assets forming part of the estate for estate administration tax (i.e., probate fee) purposes.

In the FAQ, Ontario has confirmed that certain assets are excluded from the value of the estate for purposes of the tax.   Excluded assets include “RRSPs, RRIFs, TFSAs and life insurance policies where there is a living named beneficiary”. (Please see the 8^th point in the section entitled, "Value of estate assets" in the FAQ)

The return, as well as the Guide for completing it, can be accessed from the Ontario Ministry of Finance’s web-site.

Also, in 2012, when the proposed changes had been tabled, we prepared a summary of the changes to the Estate Administration Tax Act in Probate Process – Ontario (7193).  Here, you will also find an example of how the legislation has impacted estate executors’ responsibilities.

More than ever, it’s the right time to discuss segregated funds’ advantages, which include estate bypass when a named beneficiary is designated.   Contact your sales office for more details.

Information provided by Standard Life 

Your Legacy

Your legacy is more than a bank balance. It's the impact you make on your community and your family. Here are six tips for turning a nice thought into a powerful reality:

1) Get Organized - Ensure your personal information - bank account and investment contract numbers, insurance policies, tax information, etc. - are up to date and stored somewhere safe and accessible by your advisor, attorney, beneficiaries or family members.

2) Check your Will - Make sure you have a will and it reflects your current intentions. Do the same with any power of attorney or other legal documents. If you don't have a will, or need to change it, contact me or someone you trust to obtain the name of an estate lawyer ho can help draft yours.

3)  Name Names - Select an executor for your estate and ensure that all beneficiary designations complement those outlined within your will.   

4) Consolidate your Finances - Streamline your investments and bank accounts to simplify administration. Having joint accounts makes it easier to ensure resources are readily available.

5)  Minimize Taxes - Consider investments and strategies that allow your estate to bypass probate and minimize the tax bill for the next generation.

6) Discuss your Plans with your Family - Keeping them informed can help them understand your decisions.    

Over time, situations change.  Your children become adults, tax laws change, your executor ages.  It is important to review your plans every few years to ensure that they are still appropriate. 
 

Budgeting Pays

Gordon Pape had an article in the Toronto Star recently on budgeting. The average Canadian spends their money on:

27% Housing
19% Transportation
16% Food
12% Household operations and furnishings
12% Recreation, education, reading
6% Clothing and footwear
5% Health and personal care
3% Tobacco and alcohol
based on a 2009 survey from Statistics Canada, using after-tax dollars
Most families seem to fly by the seat of their pants, which may explain why our personal debt has hit record levels. Fresh Statistics Canada data shows the ratio of debt to personal disposable income rose to 152 per cent last quarter, up from 150.6 at the end of 2011.

What’s missing from this list?
Debt Repayment – specifically credit card balances, student loans, line of credit repayments, etc.
Savings – the rule of thumb is you should aim to save 10 per cent of your income in some form or another.
So you need to add both of these items to your list.
If you already have a budget, start by comparing the average percentages to your own household allocations. If you are spending more than you should in some categories ask yourself why. See if there are some savings opportunities available and, if so, make revisions.

If you don’t know what you are spending your money on – now is a great time to start. Send me an email and I can send you a worksheet you can use to track where you are currently spending your money. Once you know where you are spending your money, you can develop a budget that you can live with.

Just remember – your budget must balance – or you end up deeper in debt.

Budgeting can result in your having more money at the end of the month (also you’ll sleep better.) So get started now.  Call me if you need assistance.

Virtual Shoebox 

 

The Canadian Life and Health Insurance Association Inc. has developed an extensive Virtual Shoebox. It is a document that encompasses an inventory of all of your personal and household financial information.   If you have ever had to go through someone else's documentation after they became sick or died - you would make sure that you kept a document like this up to date.   You can get the form on line (click here) or I can get you a hard copy (if you prefer). Just send me an email with your mailing address and I'll send it off to you.

A list of documents you need to gather

Can you imagine what would happen if you died and your beneficiaries didn’t know where to find your will? Or your money? To make sure this doesn’t happen to your family, always have the following key documents safely stored together in a place where they can easily be found:

1. Your will: Outlines who gets what when you die. It also appoints guardians for your underage children. Without a will, your assets will be divided according to provincial law, not your own wishes. Worse, your children might end up not living with the guardian of your choice.
2. A living will: Spells out how you want to be treated if you are unable to make decisions about your own health (i.e., whether you want to receive life-sustaining treatments like respiration or resuscitation or whether you want organs donated).
3. A power of attorney: Gives someone the power to make financial decisions for you in the event you’re no longer able to do so. Without this document, the courts will have to appoint a guardian to look after your affairs, and that can take a lot of time – and money. NOTE: You should ensure that there is a second signature on all of your bank accounts as well.
4. Proof of ownership: Gather together all documents that show you own your house, land, vehicles, stocks and any other assets. Without these, your family might not know what you own or be able to prove it.
5. Three years of tax returns: Tax returns give your executor a sense of the assets and finances that are part of your estate.
6. A list of bank accounts and safety deposit boxes: According to the Bank of Canada, there are approximately 1.3 million unclaimed balances in Canada worth some $465 million. You want your family to be able to find your money – show them where it is by listing all your accounts.
7. Stock certificates and savings bonds: Hang onto your investment account statements and store them safely with your certificates (if you have any on paper), so your family can easily determine exactly what you own.
8. Pension, retirement and annuity documents: Help your family access any remaining retirement benefits they are eligible for through your retirement plan. If you’re getting money from an annuity, the contract will help your beneficiaries understand what they are entitled to and from which company.
9. Insurance policies: You bought insurance so your loved ones would be financially covered when you die, so be sure to keep copies of all insurance-related documents on hand so your family will know what policies you have.
10. A list of your debts and loans: A list like this will ensure your family won’t end up having any unwanted surprises down the road, such as debts they did not know about.
11. Marriage licence and/or divorce papers: Legal proof of marriage and divorce can make it easier for the executor of your estate and for your family.
12. Your user names and passwords: With social media and online accounts becoming increasingly important, you want to be sure your loved ones will be able to access your accounts.
13. Contact information: Do you have a lawyer, financial planner, or other professionals who assist you.

Make sure that their names and contact information are also listed.
Review your list once a year to ensure that it’s kept up to date.

Unlocking Old Ontario LIFs and LRIFs

April 30, 2012 is the deadline for Ontario Old Life Income Fund (LIF) and Locked-in Retirement Income Fund (LRIF) clients to take advantage of the one time 50% unlocking opportunity available to them.

In June 2009, Regulation 909 under the Pension Benefits Act of Ontario was amended to include changes to the rules governing Ontario locked-in accounts including Old LIFs* and LRIFs. Until April 30, 2012, owners of an Old LIF or LRIF will have a one-time opportunity to withdraw or transfer 50% of the total market value of the assets of the fund to an RRSP or RRIF.

The request to withdraw or transfer must be made on a form approved by the Superintendent of Financial Services and be submitted to us by April 30, 2012.

No applications for any withdrawal or transfer may be made after April 30, 2012.

Effective May 1, 2012, owners of Old LIFs and LRIFs will no longer be able to
withdraw or transfer 50% of the assets in their account.

For more information check out the information on the FSCO web site

* Old LIFs are Life Income Funds issued on or before December 31, 2007 and locked-in under the Pension Benefits Act of Ontario.

Additional CPP Changes effective January 1, 2012

Several changes are taking effect on January 1, 2012 that may affect you. You will not be affected by these changes if you started receiving a CPP retirement pension before December 31, 2010, and you remain out of the work force.

If you are between 60 and 65, receiving CPP and still working, you and your employer now must contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).

If you are between 65 and 70, receiving CPP and still working, you and your employer now have the option to contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).

If you are between 60 and 70 and not yet collecting CPP, the adjustment factor that will be used will change. For those taking the benefit before December 31, 20110 the adjustment was 0.5% per month above or below age 65. This percentage will gradually increase to 0.7% per month for those taking late retirement and 0.6% for those taking early CPP . These changes will take full effect by 2016.

In addition, the number of years with zero earnings that are automatically dropped from the calculation of the CPP pension will increase.

Starting in 2012, contributors no longer have to stop working or significantly reduce earnings for two consecutive months to receive the CPP retirement pension before the age of 65. This will make it easier for Canadians to make a gradual transition to retirement.

For more information, you can check the Service Canada web site or give me a call.

Service Canada has a retirement calculator on their web site to assist you in calculating your benefit.

Making a claim on your insurance

This summer I have assisted several clients making an insurance claim. Like everything else in life, they seem to come in batches. While none were happy to be making a claim, they were all pleased to receive the insurance proceeds.

Life insurance claims are straight forward – the insurance company needs a death certificate and a claim form. The money in most cases is paid out in less than a month from when you notify me. In both cases this summer (even with a mail strike), I managed to deliver the checks to the beneficiaries in about 2 weeks.

Disability claims require more time and more paperwork. The client I am working with is an employee at one of the groups I insure. I was called as soon as he was off work. The employer and employee have completed their paperwork; we’re just waiting for the doctor to submit theirs.

Do you have long term disability coverage? If you’re an employee – look at your pay stub. If you show an amount deducted beside LTD – you have Long Term Disability coverage that probably starts if you’re off work for 17 weeks. If you have an amount listed besides WI (weekly Indemnity) or STD (Short Term Disability), then you have Short Term Disability as well. As opposed to health and dental benefits, disability only protects your income and not that of your spouse.

You should review your coverage whenever there’s a change in your life. Whether you require Life Insurance to protect your family, Critical Illness Insurance to receive a lump sum payment should you get a life threatening or life altering disease or Disability Insurance to pay you monthly while you are unable to work or a combination depends on your specific situation.

Give me a call. I’d be pleased to walk you through the calculations to determine how much insurance you need and what type meets your specific need.

The more things change, the more they stay the same

We've all heard this proverb and have all probably used it, but what does it mean in your everyday life?

This week, I went on line and bought tickets, posted pictures and checked bus schedules - all activities that a few years ago would have required phone calls and / or a trip out of my office to accomplish. I spoke to a friend half way around the world on Skype for nothing (versus the expensive long distance phone call of 15 years ago). I could go on - we all have examples from our day to day lives.

The fundamentals of financial and estate planning have not changed. We are all concerned that we might outlive our money or whether we can maintain our standard of living for ourselves and our families - no matter what happens. What have you done about this? Many people bury their head in the sand and hope that nothing serious happens. Some people have reviewed their plans with a professional and know what would happen if - and many of these people are pleased to learn that they are in a much better position than they thought they were in.

Would you like to be one of the people who knows for sure? I am offering a confidential, complementary review of your current situation along with suggestions on how to ensure that you can maintain your lifestyle - to my clients and readers of this newsletter