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Planning your funeral

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At TriDelta Financial we believe in life balance and planning, which requires addressing those ‘not so pleasant’ aspects along with the fun stuff. Planning a funeral is one of these important realities and we asked Glen Oaks Memorial in Oakville to provide some planning insight:

Although everyone agrees that a baby shower, birthday celebration, wedding, vacation or even a picnic requires planning. People seldom consider planning ahead for one of the most important events in their lives.

Death is a 100% certainty – it’s a natural part of life. But your death will inevitably bring loss and sadness to those who love you. By planning your own funeral now, you can ease the burden on your loved ones in the future.

Planning now means you make the decisions

There are countless decisions to be made when a funeral is being arranged, from choice of flowers to choice of cemetery. When you plan ahead you can decide on every detail yourself without any pressure. In fact, planning your own funeral can be as satisfying as planning for any other important event in your life. You can make sure the arrangements are exactly what you want, and your family won’t have to guess what your wishes may have been.

Some final decisions really should be yours

Burial? Cremation? Deciding how to manage your remains is one of the most wrenching decisions your loved ones must make. By pre-planning, you can make an informed choice. And your family can take the time now to discuss ideas openly, while minds are clear and focused.

Financially, it makes far more sense to plan ahead

Family members often feel emotionally pressured to overspend on funeral arrangements. By taking control of the costs today, not only will you relieve your family from those pressures, you could save your estate thousands of dollars, allowing you to leave an even greater legacy.

Even if your estate will provide the funds for your funeral, it still makes financial sense to plan now.  By making your investment in today’s dollars, you’ll protect your estate from inflation rates in the future. In fact, your investment in pre-planning is guaranteed. Legislation requires funeral and cemetery companies to put monies received for a pre-arrangement into a trust account held by a financial institution that has Canada Deposit Insurance Corporation depositors’ insurance. Or you can purchase insurance to fund your pre-arrangement.

The right time to plan your funeral  is now, which will provide peace of mind.

To get started, click here to request your free Estate Planning Kit today or call Chuck Duchesnay at (289) 351-1040.

Article compiled by Chuck Duchesnay, Branch Manager, Glen Oaks Memorial Gardens & Reception Centre, Oakville, ON.

 

 

The Top Ten Family Wealth Transfer Mistakes

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Most Canadians intuitively believe they should have a wealth transfer plan, but most of us have not created one.

A business owner thinks of how to pass on the business to children at retirement.  A husband thinks about what will happen to his family if he has a heart attack and dies.  A wealthy retired couple wants to contribute to a favourite charity.

Few people want to pay extra tax while they’re alive, let alone on their wealth when they’re gone.

Yet surprisingly, an Ipsos Reid survey found that almost half of Canadians have never had a detailed discussion with their family about their final wishes.  Even more surprising is that fewer than 40% of Canadian boomers have a will!

Discussing ones inevitable death can be uncomfortable, but the failure to do so can lead to stress and hardship on loved ones during a very difficult and emotional time.

A wealth transfer strategy is an integral part of any comprehensive financial plan.  It provides:

  • Peace of mind that family is protected.
  • Ensures your assets are passed on in a manner that is consistent with your values and beliefs.
  • Can reduce excessive taxation and probate fees

This is the first installment of a series of more detailed articles on the topic of wealth transfer.

The Top Ten Wealth Transfer Mistakes

1.   Failing to have a current will

A will or other transfer vehicle needs to be in place, and these documents need to be updated when circumstances change.

2.   Having no integrated game plan

Wealth transfer involves legal, financial, tax, and emotional issues.  All must be balanced for the plan to be effective.

3.   Failing to consider all assets

All assets that must be distributed need to be considered, and their valuations need to be kept current.

4.  Not considering the tax consequences of wealth transfer and protecting assets

This includes improperly owned life insurance.  Insurance can be an important planning vehicle, but not considering who owns it could cost your estate or business.

5.   Ignoring the need for liquidity

An estate with a large portion of illiquid assets will be difficult to settle quickly and may not meet the goals set out in the original plan.

6.    Not taking into consideration all the potential beneficiaries

This includes people who either should be looked after or must be looked after.

7.    Keeping too much money in the estate

Distributing assets prior to death may be an important task.

8.    Not considering creating a living legacy

Making use of assets to benefit others while alive is an important consideration.

9.    Not considering the potential tax consequences of gifting or asset transfer between family members

Beware the attribution rules!  This failure can also affect family businesses, if an attempt to distribute the assets equally among family members compromises the business.

10.   Not taking steps to reduce taxes

Individuals have the right to find ways to decrease the amount of tax paid, increasing the amount available for distribution to people & causes that are important to them.

Article written by Brad Mol, Senior Wealth Advisor at TriDelta Financial

Tel: 905 845 4081 Email: brad@tridelta.ca

10 Things You Should Do Before You Retire

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Retirement means something different to each of us and is likely different from your parent’s retirement. Peter Laslett (Cambridge Professor) in 1989 published a book called “A Fresh Map of Life”, establishing a new “Third Age” in our lives. This new stage is a block of time in our life before we face health issues, during which we can define our own view of what we aspire to in retirement, focussing on personal self-realization and fulfillment. To get the most out of your “Third Age”, there are things you should do before you reach it.

1 Establish your goals for your retirement.

Having a stated goal or vision for your retirement is the first step in making sure you achieve what you want out of your “Third Age”. You probably have “pent up” demand for certain activities whether sports, travel, family time or engaging in new interests. Maybe you will transition slowly into retirement, through consulting or part-time work. You will need to provide structure to your day, goals to achieve, mental and social engagement. Most of us will be able to shape this third age to our own interests and enjoyments, at-least to some degree.

Discuss with your spouse/partner what each of your goals are and how you would like to spend your time. Maybe one of you is retiring before the other, how will that affect things? Take the time to understand and respect each other’s goals, and find the balance between each other’s desires and any constraints, whether time, interest, health or financial.

2 Medical Benefits

Most Canadians have access to good medical benefits through their employment. Take advantage of these benefits while you are still employed for yourself, your spouse and any dependents on your health plan. Get a complete physical and deal with anything that needs to be addressed while you’ve got the support of the company’s paid medical benefits. Access your company’s EAP (Employee Assistance Program) for any advice you might want; this is one of those underutilized company benefits that you don’t value until you use it. Once you’ve left the employment world, it can be difficult to find the right expert to help you out.

You will need to consider how you want to replace those medical benefits after retirement, both before and after the age 65. ManuLife and SunLife provide an insurance benefit product that mirrors your employment coverage if you sign up within a short period after retiring (usually 60 days). Many professions offer access to medical insurance through their professional organizations. Based on your personal medical history, investigate products for both traditional hospital/drug/dental/eye and also newer services such as physiotherapy, etc. Consider what you may need now and what you may want after the age of 65 to complement public medical coverage.

3 Company Car vs Personal Car

If you have been fortunate enough to have a company car during your employment, you are going to have to get a new car when you are finished your employment. Sometimes your employer will be willing to sell you the company car for book value or a reduced amount. Consider this option particularly if the car has been well cared for and under your control. Remember though, there is usually a taxable benefit associated to buying a company car at below market value.

4 Other Employment Benefits

You may have other company benefits through your employee. Maybe you have life insurance, disability insurance, or critical care insurance. In most cases these will expire when you retire. If you need them after retirement, it’s usually better to purchase them when you are younger. The time to investigate them is several years before retirement to decide what you want to replace with your own insurance coverage that will continue after retirement. Not everyone needs insurance; consult a trusted professional to figure out what’s right for your situation.

Professional dues and continuing education is frequently covered by your employer. Many professional associations offer reduced annual dues with retirement. If you plan to continue working after retirement in your profession on a part-time basis, you will need to include these costs in your plans.

5 Major/Minor House Repairs

Take an inventory of whatever major or minor house repairs need to be done and get them done before you retire. Maybe the roof is approaching 20 years+; maybe you need to modernize the bathrooms or kitchen, maybe the backyard needs a new deck. Fit these unusual expenditures into your last few years of employment while you still have regular money coming in so that you won’t have any major bills in the first several years of retirement. If there are any expensive surprises, you want to address them before you retire and have options on how to pay for them.

6 Knowledge Transition

If you have been with a company or in a role for many years, maybe even more than 10 years, you’ve got a lot of company history, practices, and accumulated knowledge that has helped make your team and company successful. Share this accumulated knowledge before you retire. Develop a plan with your team and your manager for knowledge transfer. Sharing this knowledge in a structured manner acknowledges your contributions and better equips your team to be successful after you leave. Instead of your retirement being an on/off switch think of it as a gradual transition during which you will prepare yourself for your next life stage, knowing that you are leaving a capable team equipped for success.

7 Update your Wills/Power of Attorney

Many of us prepare our wills and power of attorneys’ once and then forget about them. They should be updated regularly for both changing legal situations and changing personal decisions. If you haven’t updated for your will for 8-10 years, this is the time to have your lawyer review it for anything that needs to be updated.

8 Have a Personal Financial Plan Prepared

An in-depth personal financial plan is the road map that will consider your combined financial assets, government and employment retirement benefits. It will determine the best way to meet your life goals with the resources at your disposal. It can help you value lump-sum payments, deal with stock options or other employment or retirement incentives and determine the most tax efficient investment option. It will identify actions to minimize your tax bill and maximize your government benefits (timing of CPP, minimizing OAS clawbacks, etc). It will help you reduce risks within your portfolio to match your lifestyle needs. It will give you a plan for annual withdrawals from your investment resources to meet your life goals and life span expectations. And it will identify tax efficient estate distribution, whether within the family or to your favorite charity. Have a financial plan prepared by a professional to ensure you get insight into how best to use the resources at your disposal to meet your financial goals in retirement.

9 Practice Financial Discipline

If your financial plan calls for you to reduce your annual expenses after retirement, practice this discipline for a couple of years before you retire. Test your assumptions for reasonability, whether its about the frequency of eating out, reduced clothing bills, etc. Make sure you will have a comfortable lifestyle and the discipline to stick within your budget. Use your last couple years of employment to pay off your mortgage if you haven’t already or to pay off your credit cards every month. Practice financial discipline before you retire so you will be well prepared to live within your budget during retirement.

10 Enjoy Life

Enjoy your retirement. Your “Third Age” is your time to enjoy life in whatever way suits you and your spouse/partner best. Look after yourselves, be it your health or your wealth. And Enjoy.
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Further Reading

There are a significant number of books available on how to plan for your retirement. Some that I have read and can recommend include:

What Color is Your Parachute? For Retirement – John E Nelson & Richard N Bolles

The 7 Most Important Equations for your Retirement – Moshe A. Milevsky

Don’t Just Retire Live It, Love It! A Personal Planning Guide To Enhance Life After Work – Rick Atkinson

 

Written by Gail Cosman, CA, Senior Wealth Advisor, Tridelta Financial

Why you need a Personal Financial Plan

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Over 25+ years as an executive in the business world, I have witnessed the value of a good financial plan to a company’s success. Corporations with excellent financial organizations reach their financial goals, or understand the key reasons they were missed. They have metrics for measuring progress and address gaps as they occur. They predict cash overages/shortages and have plans for how to deal with them. And most importantly, the organization’s missions/values and strategies are embedded in their financial plans.

In the same way, a financial plan is a critical tool for you to achieve your financial goals; when done well it will reflect your personal goals and values. Do you want to leave funds for your children, do you want to support a local charity or association you participate in, do you want to travel regularly, do you want to live financially independent in the near future, do you want to have a high “sleep at night” factor in your investments? All of these goals should be embedded in your financial plan.

A basic financial plan can help you identify “your number” (how much you need to retire) to guide you in your retirement investing. A good financial plan will do more than that: It will time your cash-flows in order to minimize your taxes and maximize your government benefits. It will provide a range of sensitivities on age, investment performance, and inflation so you can make the decisions today to prepare yourself for a variety of possible scenarios for your future. It will provide investment allocations that will maximize your capital preservation while minimizing your risk.

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At critical stages in your life you should do a financial plan – such as when approaching retirement, a change in your family situation, or if you are looking for a 2nd opinion on your investment portfolio. There are many sources of a good financial planner, whether through the internet, the FPSC website or through your own network. Search for someone you feel comfortable with, have a sense of trust and respect to prepare a financial plan that reflects your goals, your values and your risk profile.

Gail Cosman
Senior Wealth Advisor
TriDelta Financial

Give More, Spend Less

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The following is a story about creating unbelievable value with charitable contributions by simply structuring it efficiently. In our case study below we demonstrate how the charity of your choice can receive $1 million donation that will only cost the donors a fraction of this.

We have changed names, but detail a real life example of a charitable contribution strategy we implemented with a client recently.

Joe and Susan were able to make better use of their hard earned money and leave a significant legacy to the Alzheimers Society, here is their story:

The circumstances:
Joe and Susan were heading into a new phase in their life as retirement approached. Their goals:

  • 1. Maintain their lifestyle in retirement without fears of running out of money.
  • 2. Travel frequently.
  • 3. Pay as little tax as possible.
  • 4. Help advance Alzheimer’s research to rid the world of this cruel disease.

They approached us to devise an efficient plan, which revealed a few key points:

  • They will not outlive their money, but would likely have a $2 million Estate and a lifetime tax bill of $530k.
  • They have lots of financial ability to travel.
  • The $530k in taxes can be cut significantly with proper planning.
  • A good part of the tax savings can go towards charitable causes like the Alzheimer’s Society with the right strategy.
  • They can even afford to retire earlier, and potentially spend more time volunteering.
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The Strategy:
Joe & Susan contributed $5,000 a year to charity, but after learning how efficient we could structure their situation, they felt they could afford to give more, and wanted to.

We showed how they could substantially increase donations without it costing them much more than they had been contributing. The Alzheimer’s Society would however benefit significantly more with the new strategy.

Highlights:

  • 1. We set up a joint insurance policy that will pay out when they both pass away.
  • 2. Fund the policy with $11,000/year for 20 years. After 20 years, the policy will be fully paid for.
  • 3. Their favourite charity will be the beneficiary of the policy.
  • 4. Because of the way it is structured, Joe and Susan will receive a full donation tax credit every year. In their case, every year they get $4,400 back, so their net cost is just under $6,600 a year.
  • 5. The charity will receive a $1 million benefit!
  • 6. Essentially, Joe and Susan put $6,600/year in for 20 years, a total of $132,000, and the total benefit to their favourite charity will be $1 million.
  • 7. If Joe and Susan live to full life expectancy, the AFTER TAX rate of return on this charitable investment will be over 10%, guaranteed. There is not likely a better investment return available – especially given the low level of risk.

Joe and Susan can still give roughly $9,000 a year to charity – either through cash or stock – and help make a more immediate impact.

You don’t need to donate $11,000 for this to work for you. The strategy is scalable and can be structured to match your particular situation.

To get a quick sense of your financial picture and what you can afford to give, use our free online calculator.

Written by Brad Mol, Senior Financial Planer

How to Get Low Cost Estate Protection

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Josh Tward, Director of Insurance Operations, writes, “Clients often ask if they should be concerned with Estate Planning or if it’s only an issue for the wealthy.

The truth is that you don’t have to be wealthy for Estate Planning to be important to you, your spouse, children, grandchildren, etc.    The scale of assets being protected might be different; but no less important to your beneficiaries, & loved ones.

A simple and cost effective way to achieve long term Estate & Tax Protection would be to establish a type of life insurance policy, adapted for Estate Planning purposes.  The insurance in these plans are usually permanent, with locked in & level costs of insurance (COI), for life.  One of the most effective life insurance plans utilized in Estate Planning today is the Joint Last to Die Life Insurance Policy (JLTD); where both spouses are insured on the same policy. The policy pays out upon the passing of the 2nd spouse, thus keeping the cost of insurance lower.  In the insurance industry in this country, there are some interesting variations on JLTD policies, in terms of product features & pricing.  A qualified & experienced insurance broker, in the area of Estate Planning, can adapt the best option for specific client needs.

major-charity-contribution-gift

In Canada, when one spouse passes away their assets are allowed to pass to the other spouse without having to pay taxes on them. When the second spouse passes away a large tax burden can be created when the assets pass to the next generation.

The tax bill after the death of the second spouse can be very large, for many hard working Canadians.  This tax bill could be more than 40% of the value of the estate.

Here is where proper Estate Planning becomes so important.  Establishing a JLTD life policy tailored to your estate planning needs, can be a very welcome site; when that final tax bill from the government arrives.

The JLTD policy pays out lump sum & tax free to the beneficiary/s or your estate. Those funds are available quickly & can be used to pay the tax liabilities that will be owed on that 2nd passing.  Thus, allowing those hard earned assets to be directed to the beneficiaries of your choice & not the government.

Proper Estate Planning is critical in protecting a lifetime of hard earned income & assets.  By establishing smart & effective financial products like JLTD life insurance, you will be the one in control of protecting those assets & directing them where you want.

Life insurance policies are always best established as early as possible.  Insurance premiums only get more costly each year.  They also tend to increase in price at a much quicker pace, as we head into our forties & beyond.  Health is more likely to be favourable at younger ages as well.  Life insurance costs & Insurability is determined by variables such as:

Age – Health – Smoking status – gender, etc.

By working with us to prepare a comprehensive financial plan, you can learn ways to substantially reduce your lifetime tax bill and significantly increase the value of your estate.

If you would like to find out more about Estate Planning & how it relates to you, your family, &/or business please contact us.”

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