Dying isn’t free (no good deed goes unpunished!)

I know this sounds a bit irreverent or flippant however it is meant to stimulate some hard thinking about the real costs of dying. Sure, there are lots of lists around, but I haven’t found 1 yet that covers everything I have seen in nearly 43-years in this industry. Is this list perfect? Absolutely not – but it will get you thinking about your own and your family’s situation. Remember, not all of these will apply to you – but some will – and the costs range widely.

* Probate Fees * Legal Fees * Copying and certifying fees * Paid searches for titles, etc. * Legal notifications to family * Legal notifications to creditors * Asset Transfer fees * Estate Accounting Fees * Terminal Tax Return Fees * Estate Tax Return Fees * Rights and Things Tax Return Fees * Ongoing Tax Return Fees if estate not settled within 12 months * Testamentary Trust Tax Return Fees *Preparing and filing tax election fees (estate and personal) * Executor and Trustee Fees (annually until Estate and all trusts closed) * Executor and Trustee disbursements – copying, telephone, faxing, certifications, mileage, parking, travel expenses * Valuation fees – real estate, listed personal property, personal property, real estate and other capital and/or depreciable property * Transfer costs for title transfer to Executor and/or Trustee and eventually to residual beneficiaries * Commissions paid for asset sales – real estate, estate sales, sale of listed personal assets, if necessary * Commissions paid to investment advisors for selling stocks and bonds not held in managed-money accounts *Income taxes payable – terminal tax return, estate tax return(s), Rights and Things tax return, Trust tax return(s) * Tax due on transfer of pensions and registered assets to other than spouse * Shrinkage of realisable asset value due to urgency of sale – tax paid on FMV not $ received – must replace lost $ * Account closing fees on nominee accounts and self-directed investment accounts
* Court fees – Probate and other as necessary if Will contested * Court costs if you die intestate * Banking Fees – estate bank accounts, trust bank accounts * Rental Fees – safety deposit box or other secure location *Funeral, memorial and related costs – cultural, faith-based, community or family expectations. Wake or similar * Costs of collecting promissory notes owed to deceased – loans to family members and businesses * Terminal care costs not covered by Government, group or personal plans * Legal costs to defend Will from challenges * Payment of all legally enforceable debts – including ones you guaranteed or co-signed * Perpetual pet care * Costs of care for children and other dependents (maybe your parents!) * Cost to close your social media accounts * Payment for ongoing business management until it is sold * Short-term emergency funds for survivors * Ongoing income for survivors including education costs * Cash Bequests * Murphy is alive and well – expect a visit along with family discord! * Your guess: ______________________________

I can promise a few things about this list: a) your estate will have at least one cost not included here; b) you will be very unpleasantly surprised at the total amount of money (and time) involved; c) your estate will be cash-poor – not enough cash in the bank to pay these costs which means that; d) the net value of your estate, without proper planning and a source of replacement tax-free cash, could even be bankrupt which means your family and heirs would get zero. Do you and your family need assistance?

When does not spending $150.00 cost you more than $6,000.00?

Six years ago, Al went to see his lawyer. A widower in his late 70s, Al had been advised to update his Will after his wife Gloria had passed away. He thought this made sense and off he went. The lawyer did his job properly and professionally and the new Will has duly prepared and signed.

Al and Gloria had 3 children – 2 daughters and a son. The eldest daughter (a single parent) Tracey had a daughter named Cheryl. Tracey sadly had passed away shortly after her mother from cancer and Cheryl was left on her own, is now living on the fringes of society and is rarely in touch with other members of the family. Al’s other daughter is Tess and she ended up leading a very challenging life filled with drugs, alcohol, one abusive husband and a series of less-than-ideal boyfriends and live-in partners. She also has had to deal with significant emotional and intellectual challenges and her only source of legitimate income is a tax-free disability pension from the government. She currently lives (rent free) in Al’s residence because Al is no longer legally competent and is in an extended care facility. She says she stays there so she can be close to Al but the reality is she is sponging off Al since he can’t do anything about it and Tess, challenges aside, knows a good deal when she finds one. Her boyfriend-du-jour spends his time dealing soft-drugs and working part-time as a mechanic.

The son, Bruce, got involved off-the-grid very early in life and now in his mid-50s, is a hard-drug addict, has AIDS and lives and feeds his own habits by stealing (including from Al) and selling drugs. He disappeared in mid-2013 and hasn’t been seen or heard from since that time but he did take Al’s debit card and emptied Al’s account to the tune of over $8,000 over 4 weeks. He was living with Al before he went into care for the onset of dementia and Al trusted him with his card – and unsurprisingly, this trust was betrayed.

And NO, I am not making up his situation – just the names – the circumstances are exactly as described – unfortunately.

When Al had his Will re-done, the lawyer and Al’s financial advisor told him he needed to establish an Enduring Power of Attorney for personal care, property management and healthcare. Al agreed, but he never took this step because he didn’t feel he could name either of his surviving children – Tess and Bruce – or his grand-daughter Cheryl, and with good reason. But now…

Since Al is no longer legally competent the problem rises. Who makes his decisions and manages his property? What about his investments, his pension income, his personal assets, the level of care that can be afforded? Bruce can’t be found, Tess is not capable and the Office of the Public Guardian and Trustee would fight any attempt by her to be named a guardian. Cheryl is not appropriate either, even if we could locate her. So now what? Fortunately Al’s financial advisor is also a friend and stepped up to apply to be appointed as his Committee in court, with Al’s and Tess’ agreement and the support of the OPGT.

Once the Committee process started, a cousin of Al’s (named Jeff) was located and has joined the application as a co-Committee to act jointly with the advisor. Al is very lucky to have two people willing to take on this task of managing his personal, financial and health care affairs – but the cost of applying for Committeeship has now exceeded $6,000.00 and is not finalised yet – and this cost will come from Al’s assets as part of standard Court rulings in cases such as this.

Al knew his advisor and friend and cousin Jeff would have agreed to be joint-attorneys and guardians if he had only asked and redone the rest of the documents. But Al didn’t want to impose and didn’t want to burden them with the unique circumstances of his family. Admirable thoughts of course, but now the reality of avoiding that decision has hit home, all for the sake of about $150.00 six-years ago.

Are your plans for personal, financial and healthcare up-to-date AND properly documented?

Garage Sales are Your Friend

Spring cleaning time is here and I love it! With even the hint of warmer weather and sunshine I get a major itch to simplify my life and clean my spaces from unwanted clutter. Freeing yourself from the over accumulation of “stuff” in your life serves so many positive purposes.

The first advantage of a good spring clean is you take time to sort through everything. Find what works; what needs fixing; what has been outgrown; what you don’t need, want, use, or have space for anymore; and forgotten, yet still loved items. You can then make a plan to deal with it. Get it fixed. Throw it out. Recycle it. Clean it and put it where you can find it and use it. Put it into your “have a garage sale pile.”

The second advantage is you get the opportunity to better organize your life. Put things in their place. Get rid of the things you’ve been storing for who knows how long or for what reason. How much time do we lose and how much stress do we cause ourselves because we cannot find the thing we want buried amongst all the things you don’t want.

The third advantage is it gives you an opportunity to make some money. Garage sale season is approaching and it is the perfect opportunity to clear your space of your no longer loved items while making some cash. If you don’t think you have enough for your own garage sale, get together with a group of friends that also want to free their lives of a few things. You can then take the money you earn and put it into something you actually want like your vacation fund.

The fourth advantage is getting a good look at all the things you have spent your hard earned money on. Do they bring you joy? Do you use them regularly? Or do they just collect dust, take up space, and add to the debt on your credit card? Facing our consumption head on gives us the opportunity to choose to be more conscious in our lives going forward.

The fifth advantage is seeing what you need to replace or figure out what you want to get before garage sale season. If your kids need to get new skates or sporting equipment because they have outgrown it you can keep your eyes open to replace it at garage sales. If you are wanting to try out a new sport or replace worn out equipment this is also a great opportunity for you.

The fifth advantage to a good spring clean is how much lighter and more energized you feel after completing it. You know where your stuff is, you’ve dealt with the clutter, and you made some new, and hopefully healthier, decisions.

I challenge you to tackle the closets, drawers, corners, garages, and storage areas in your home. Find your treasures and find future treasures for others. You’ll be glad you did it.

“I had more clothes than I had closets, more cars than garage space, but no money.”
Sammy Davis Jr.

Shopping is NOT a Sport

Everywhere we go the world is set up to part us with our money. It may only be a few dollars, maybe a few more, but it’s okay. You want this gadget, article of clothing, candy, tool, whatever. We put it in our cart, we add it to the till, we pull out our wallet. Next thing we know our bank account is smaller than we were expecting and our wallet is thinner while our credit card statement is thicker.

We have all been bitten by the impulse purchase. All of us. If you think you are immune, let me ask you one question: “If I were to go to your home and open up your closets, your cupboards, go into your garage, your tool shed would I find anything that you spent your hard earned money on that you used once or NEVER?” If you can honestly say no, then my hat is off to you. If you are like the vast majority of people (myself included) you would find an item or two.

So the million dollar question is how do we minimize our useless spending. And yes, I did call it useless spending. The fact is if it really was something we wanted or needed it would have been used more than once or never. The reality of life is that we will have some pointless spending. It isn’t a bad thing as long as we keep it in check, but it is a big problem if it gets out of control.

Conquering the frivolous shopping problem breaks down into a few steps or options. The first step is to stop looking at shopping as a sport. Unfortunately too many people resort to “Retail Therapy” to deal with emotional issues. This works as well as alcohol, drugs, or junk food for a lot of people. It doesn’t fix the problem it makes it worse because the high wears of quickly and now we are out money. If going on a shopping spree is your way if dealing with the stresses of life find another outlet. Preferably a healthy one like exercising, going for a walk with a friend, or meditation just as some examples.

The second step / option is to put yourself on a cash budget and allow yourself some play money. That way you can still enjoy a little frivolous spending without breaking your budget. In fact if you plan for it, it isn’t wasted money, just a part of your overall plan for financial success.

The third, and most important, step is to ask yourself this questions every time before you spend money on anything, “Do I really want this?” By slowing down and asking yourself this very simple, but extremely powerful, question you put into motion your biggest ally, your brain. Most of our spending is unconscious. We are creatures of habit that operate on auto pilot. By taking the moment to ask ourselves this all important question we move from unconscious to conscious. A lot of the time we will look at the item and decide no, this isn’t going to give me what I really want. I’d rather save for my Hawaii vacation, or pay off my credit card faster, or stick with my diet (candy and coffee are regular “wasted” purchases) or whatever may be a bigger want for you. If you can honestly say, “yes, I do want this” then go for it without guilt.

No one is taking away your right to choose how you spend your money. But we all make much better long term and short term decisions when the best part of us is fully engaged in making our decisions. Now go out and wake up when it comes to how you are investing your hard earned dollars and cents.

“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
Will Smith

Squashing the Biggest Mosquito

Now that we have figured out a lot of our spending patterns and started putting together a working budget you may have discovered a few areas where you might want to be cutting back on your spending. For the vast majority of Canadians the biggest budget killing mosquito is eating out.

For families living in urban centres it is not uncommon for their eating out spending to be as much as or even more than the mortgage. Yes, I know the little voice in your head is screaming “That can’t be true!” but in way more cases than you can imagine it is. When you add up all the coffees, the doughnuts, the quick deli or fast food lunches, grabbing take out or eat in the car food on the way from work to activities, and the actual sit down meals in a restaurant the numbers are sobering.

This is not to say that all eating out is bad. It can be a nice break from routine, a reward or celebration, and sometimes it is the easiest and best option on the super busy days that have us running all over the place. The main problem is that most people are completely unconscious when it comes to the money they are spending on the various forms of eating out because it goes out the wallet in small, but very regular, chunks.

In order to make your budget work AND improve your health and diet (restaurant food isn’t only expensive it is usually loaded in fat, sodium, and extra calories) is to cook more at home. With a little bit of advance planning you can easily cut your eating out expenditures in half.

I personally like to do my big grocery shopping trips early on a Saturday or Sunday morning. The stores are quiet, they are well stocked, and I can go home and do a lot of meal prep for the week in minimal time. I cut up my veggies, cook a few dishes (it takes almost no extra time to cook 3 – 4 meals rather than just 1), and save myself a lot of time and grief during my busy week. Also, whenever I cook I try to make a large meal for my small family of three and break up the leftovers into TV dinners for my husband and I to have for lunches or quick, busy night dinners.

Having a ‘fancy’ coffee machine at home allows me to have my chai tea latte treat for a fraction of the cost of buying one. Having healthy, grab from home snacks for the kids (and yourself) that you can keep in the vehicle can save you a lot while holding every one over until you can get home to dinner.

Unfortunately the art of cooking is quickly dying. It blows my mind that we have college kids that don’t have any skills in the kitchen. Spending quality time with our kids teaching them how to prepare healthy food is a great way to build relationship while teaching them valuable life skills. If you don’t know where to start visit your local library and check out a few cookbooks and find some that you like. Sign up for a cooking class. Ask a skilled in the kitchen friend or family member to give you a few lessons.

With a little bit of forethought and a tiny bit of preparation time you can easily squash this huge mosquito.

“Business is good for the restaurant industry. Americans now spend roughly half their food budget dining out.”
Christine Bokelman

Income Tax Time – Medical Expense Tax Credit

This is another area where I too often see mistakes that have been made in the past. For some reason, many people and tax preparers only pay attention to the current tax year date – but this can be a costly error. You are allowed to use any 12 month period that ends in the current taxation year and this can be important if you have some big-ticket items in the early part of one year that you can couple with some other significant costs from the latter part of the previous year.

As most people know, there is a threshold below which, no tax-credit is created. That threshold is 3% of line 236 of your tax return. For those who choose not to memorise lines on your return, that is your NET INCOME and it can be found about half-way down page 3 of a regular T1 Tax Return. Once allowable expenses exceed the 3% of line 236, a credit is automatically created.

So what can you do besides check for straddling of expenses across two calendar years? Look for DEDUCTIONS – and maximise them to the greatest extent possible on your cash flow. Items such as RRSP or SPOUSAL RRSP contributions reduce your NET INCOME. So do Business investment Losses and allowable moving expenses.

It can be handy to track your expenses on a computer spreadsheet that includes the date and then you have the necessary information at your fingertips when it comes time to prepare your own return or pass the spreadsheet to the firm who does it on your behalf. CRA won’t check if a straddle works in your favour – since you have the information.

Don’t let $$ slide through your fingers.

Cash Is Your Friend

Okay, so now the next super simple step to having more money at the end of the month without feeling deprived is to start moving from plastic to cash.  Switching more of your regular expenses to cash is very simple.  In fact it is one of the simplest and most effective financial planning tools I have used on myself and with my clients.

Quite basically how it works is to take the plastic out of your wallet; your credit cards and your debit cards.  Sit down Sunday night and figure out how much money you will need for the upcoming week.  Expenses such as:  gas, transit, parking, groceries, school expenses, lunches, coffee, kid’s allowances, etc.  Then use cash to pay for everything.

This works extremely well for most people for a variety of reasons.  Firstly, you can’t overspend.  If you don’t have the cash you can’t spend it.  By not having the very expensive plastic option we are forced to be very conscious of what we are doing with our money.  Secondly, a lot of people really don’t think of plastic as money.  “I’m running a little low on money so I’ll just put it on my credit card” puts people into very expensive debt faster than they can say “Charge it!”  Thirdly, when people are forced to hand over a $20 bill rather than a ‘faceless’ debit or credit card, they slow down a bit more to ask themselves “Do I really want this?”  Many people have found that they won’t break a $20 to buy a coffee where if they were tossing it onto a debit card or credit card without even thinking before.

Another modification that can help is to only get $50 bills from the bank (and some bank machines will dispense $50s).  Handing over a pretty red bill is more challenging emotionally than a normal green $20.  By taking all the coins you get back in the form of twoonies, loonies, and smaller and putting them into a jar for say a vacation, large, fun purchase, or to pay down a credit card debt you put yourself on the path to debt freedom faster with virtually no effort.

Success in all areas of life is made up of taking small, positive steps in the right direction day after day after day.  Try trading cash for plastic in your wallet and see the positive changes you can make without really trying.

“Security depends not so much upon how much you have, as upon how much you can do without.”

            Joseph Wood

Start Thinking Christmas NOW

Yes, you read that right Start thinking Christmas Now. Christmas (or whatever major gift giving holiday you celebrate) has a bad habit of sneaking up on people and destroying all the best laid budgets. So how do we save our budgets, our sanity, and still enjoy a generous and joy filled holiday? The key is to plan out as much as possible well ahead of time.

The first step is to create a list of everyone we wish to give gifts too. This covers family, friends, neighbours, co-workers, service providers, and hostess gifts. For some people this is a short list, for others it is a long list. Putting it down on paper makes it much easier to sort and decide.

The second step is to put a dollar amount beside each person’s name. Then total everything up. If you are okay with the number at the bottom then everything is great and you really don’t need to read any further. Most people though are more than a little surprised when they see just how much money they have going out in gift giving generosity.

The third step is to ask yourself do you really want to give a gift to each of the people on your list? A lot of the time we give gifts out of a feeling of obligation rather than from the heart. When we are giving out of obligation or beyond our budget we are missing the whole purpose and just adding stress to our lives. Some families have moved to drawing names and putting a price range on the gifts.

The fourth step is to decide if you need to spend money on everyone. I don’t know about you, but in my case I know I’ve been given (and have been guilty of giving) bobbles and doodads that I really didn’t need, didn’t like, and wish I hadn’t received. I understand that someone was trying to tell me that they loved me, but just didn’t quite know how to give it in a way that I would love. On the other hand I have been given some absolutely amazing gifts that cost no money but totally rocked my world. Things such as babysitting coupons, help with a household project, baking, and beautifully crafted handmade items.

The fifth step is to start coming up with gift giving ideas for each person on the list. If we have an idea of what each person needs, wants, likes it allows us to take advantage of great deals we might come across, and saves us from spending money on something that is just a check mark on our list.

The sixth step is to set up a gift giving budget. Some people prefer to shop all year round to even out the spending and lessen the shopping stress during the Christmas months. Other people choose to put money aside on a monthly basis to have available for when they do go shopping in November and December. No matter how you choose to do it it is still going to cost you money and that needs to be planned for. You might also want to look into using any credit card points or reward plan points. I love using my AirMiles for Movie Night Out Passes as gifts and have received much positive feedback from the people that receive them.

Now take a bit of time now to save yourself money, time, and stress come Christmas. Then when the snow flies you can sit back sipping your eggnog and knowing you’ve done a fabulous job and stayed on budget.

“Maybe Christmas, the Grinch thought, doesn’t come from a store.”
Dr. Seuss

The cost of cheating

Is there a cost to everyone when someone in the position of a Lance Armstrong, Barry Bonds, Mr. Maguire or good-old Ben the Canadian Sprinter cheat (and lots of others)? Use drugs to promote their own selfish ambitions? Think they are above the rules or the law? A sense of unbridled entitlement gone wild? Is “win-at-any-cost” valid today?

I believe we all pay a price both financially and with some of our own self-esteem to say nothing of destroyed faith on the part of young people around the world. You can certainly argue all issues but I am going to focus here on the financial price. Sports is big business – HUGE business, in fact. Sports is entertainment, pure and simple. Is the lure of perhaps 10s of millions of dollars every year as an entertainer simply too much for some weak-willed people? Do we all have flaws – of course we do. Does their position as entertainers in the public eye place higher expectations on them and their behaviour? Are the temptations of the “good life” beyond the level for people to cope now?

Entertaining goes far beyond just sports of course, but it is in sports (professional and amateur) that the worst seems to rise (if that is the right word), to the top?

Billions of dollars are spent around the world every year – perhaps even trillions – to promote all types of sports and selected “top-calibre” players. The cost of these promotions, by the way, we ALL pay when we purchase the products made or sold by the companies who promote the sports and the players. Whether is is a potatoe chip brand, some health drink, high energy drink or our favourite alcoholic beverage – advertising (and sponsorships) are advertising is a very large part of the cost we pay.

Enthusiasm for sports and the players is good, it helps us feel good about things, including ourselves. It provides a mental escape (even if just for a few hours) from other aspects of our life when we feel the need. However, it does come at a cost – a cost that we all pay, either willingly or unwillingly and even for some people, unknowingly.

We all have the choice to speak with our voices, our feet and our money. Next time you make a purchase, consider the sponsorships that the manufacturer or producer does in the course of their business. Socially Responsible Investing (SRI) is becoming more widespread as it should. Should SRI be expanded now to include the ethical issues relating to various sports and players? You decide!

Make Money Decisions a Family Affair

Now that you have chosen your Financial Day and started to get a handle on what exactly is going on in your financial household I highly recommend that you bring the whole family into the discussions and decisions. In most households you have one person who takes on the job of managing the money. They pay the bills, look after the investment decisions, take care of the taxes, choose the insurance, and generally handle the financial aspects of the household. While this does work in some aspects it misses a few important points.

When we are in a financially committed relationship both people need to know what is going on and where things are. Unfortunately ugly stuff like divorce does happen and it can be financially as well as emotionally devastating. Few things are more painful the being blind-sided on the money subject. Even if the relationship is great accidents and illnesses and death also happen. If the primary “money” person is taken out of the picture is the other person knowledgeable enough to be able to step in and pick up the slack? Having a loved one out of commission is difficult on its own. Add in financial confusion and it is much worse.

Getting input and “buy in” from all the people in the house affected by our financial decisions makes for a happier household. When everyone knows what is going on, what our resources are, what are needs are, and what choices need to be made we feel part of the solution and not left in the dark. Having different viewpoints and ideas brought up help us come up with more creative solutions. If a family wants to take a vacation and everyone knows the family budget ideas for making more money and / or saving money can be put on the table. It is a creative problem solving opportunity.

By bringing kids in on the discussions it gives us an opportunity to teach them about the realities of life. No, money does not grow on trees, and living isn’t free. We have certain resources, certain responsibilities, and with that we have to make choices. Wealthy people talk to their kids about money regularly. It is a fact of life and when we have better knowledge about a subject we make better decisions.

We plan and discuss so many things as a family, but unfortunately leave the financial aspects off the table. By putting them out in the open we have an opportunity to all learn and make better decisions as a unit, and eliminate a lot of stress and grief around the subject of money.

“Many people are in the dark when it comes to money, and I’m going to turn on the lights.”
Suze Orman