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The Money Management Newsletter: Managing Money
Ten steps to getting your plans in sync with your goals

Some activities, such as organizing your affairs, tend to slip through the cracks, because people aren't sure what exactly they need to do or they procrastinate dealing with it.

This article provides 1 0 easy steps for getting it together and guidelines for when you should review and update your plans. Acting on these steps won't take much time now, but will save you and your family many headaches later on.

1 - Set Up Your Team of Professionals

Organizing your financial life requires a team of knowledgeable and skilled practitioners. A team because each practitioner has specialized training and specific expertise that he or she uniquely brings to your particular situation:

  • Financial adviser
  • Lawyer
  • Tax planner
  • Estate and trust administrator

On a personal and emotional level, it's best to have people you trust and feel totally at ease with. Interview each practitioner before retaining his/her services, as he/she will have access to some of the most intimate details of your life. Start with a professional you've already established a trustworthy relationship with - your financial adviser.

2 - Develop Your Household Balance Sheet

A household balance sheet (your net worth statement) is a snapshot of your financial situation: What you own minus what you owe.

This will show you how vulnerable you are to shifts in your circumstances and how risk tolerant your situation allows you to be,

3 - Review Your Life Insurance Needs

Life insurance is crucial to estate planning because proceeds from policies can be used to:

  • Leave an inheritance
  • Pay estate expenses
  • Replace income

Your financial adviser can help you balance what you can afford with what your beneficiaries will need.

4 - Establish Your Will

A will enables you to:

  • Pass on assets that have not been distributed through a trust or by gift
  • Express any limits on the use of your assets
  • Name the person (administrator) or institution that will manage the final affairs
  • Name a guardian for any under- age children

If you die without a will (die "intestate"), the courts decide who handles everything, who gets what and who cares for your children.

Your will should be reviewed at least once every three years to ensure it has not been affected by changes in legislation or your personal situation.(See "Ongoing Planning Process".)

5 - Establish Powers of Attorney

A power of attorney gives one or more people the authority to manage your financial affairs if you are unable to do so. It can be:

  • General - covering all aspects of your financial affairs
  • Limited - limiting the scope of powers given to your designate(s)

6 - Establish Living Wills

Living wills let you leave instructions for the type and degree of medical intervention you want administered on your behalf if you encounter serious illness or injury and cannot speak for yourself.

While living wills are not binding in all provinces, you should discuss your wishes with your doctor and family so they know your preferences if you cannot communicate them yourself.

7 - Minimize Estate Taxes and Administrative Fees

Taxes payable are, for many estates, the single greatest debt owed on the balance sheet. The largest tax bills generally result from the deemed disposition of investments.

Often the greatest capital gains are realized on property other than an individual's principal residence, e.g., a family cottage.

To minimize taxes and probate fees payable, the value of the estate can be reduced by various actions, including:

  • Designating beneficiaries for RRSPs, RRIFs, annuities, life insurance policies and GICs issued by insurance companies
  • Establishing joint ownership with right of survivorship
  • Investing in insurance-based products, such as seg funds, which are actually annuities and therefore paid out directly to designated beneficiaries

8 - Keep Track of Accounts and Important Information

Have all of your information centralized for the household, including bank accounts, safety deposit boxes, bills, contact numbers, birth certificates and other legal documents. Put them in a safe and secure place.

9 -Review and Update Regularly

The rule of thumb is to review legal documents every three years or when there has been a life change. (See "Ongoing Planning Process".)

We recommend you review your financial plan every year - and not at the busiest time of year, such as RRSP or tax time.

Reviewing your plan annually enables you to compare where you were to where you are now, and if need be to revise your plan to get you where you want to go.

10 - Share Your Plans

Make a point of letting the people who are affected by your plans know what you've done. Put things in writing, so that everyone understands his or her role in your estate administration. Remember that all the planning in the world won't help you if no one knows about it.

To help you get it together we have prepared a booklet that allows you to record all your investment and other savings, insurance information, all in a small convenient place, to order your copy or copies for other family members, please click:

We've found a couple of brochures published by a leading investment management company, which are yours for the asking. "Your Estate Matters", which expands on the 10 steps discussed in this article, and "You and Your Family... Talking About Money", which provides hints on overcoming the barriers about discussing money. Call us or write us for more information.

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© , Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.
(905) 844-7700


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