Thursday, October 10, 2019

The Five C’s We Expect From Our Advisors


Have you fretted over an unpredictable situation?  My anxiety increases when I have to face my fears and need to be honest with my family, friends, and sometimes clients.  I am concerned our relationship may be jeopardized.  Perhaps you face the same dilemma. 


When someone has a problem or a concern, they may ask for our advice.  We realize our answer might not be one they want to hear.  Potentially they may be upset that we even suggested such a preposterous solution. 











 
Take this situation from a different angle. Imagine a tough conversation with your advisor about budgeting, succession planning, or a major real estate purchase. You need financial direction. Because of your solid relationship, whatever advice your advisor offers, you would certainly consider. You wouldn’t expect your advisor to be shaking in their boots afraid of your response. After all, you are counting on their expertise to help you analyze the best option.  However, you have to evaluate their qualifications and it’s acceptable to do so.


My top five C’s are intermingled with a few minor C’s.  Feel free to pick through the entire list of attributes. 



  
Competent

Because our advisors possess the professional knowledge, we trust their judgment. We simply cannot know all the fine details about a specific topic. Take tax planning as an example. The Income Tax Act is complicated to understand.  Not all the pieces of the tax legislation apply to everyone; however, we still need to filter through the pieces pertaining to our unique situations.

Whether it’s tax planning, legal advice, or insurance analysis, we are presented with many possibilities which make our final decision more onerous. Choosing what is in our best interest needs to be interpreted by a professional   This leads us to the next skill our professional advisor must possess.

Communicators

Because our advisor communicates effectively, we recognize the reasons behind their recommendations. They talk at our level of understanding. Quite often the industry’s jargon will fly over our heads so any strategies must be explained in easy-to-understand language. Logic dictates that if we don’t understand the plan, we won’t understand the benefits. Communication is a two-way street.  Our professional advisor may possess all the textbook knowledge but the real skill is delivering the information so we get it.

Imagine your accountant saying, “We need to complete the Section 85 Rollover Form” versus “We need to complete the Do-Not-Tax-Me Form”. Notice the walls of the language barrier self-destruct. When our advisor takes down any language barriers, they are building trust in our relationship.  We automatically feel an ownership in the strategy because they communicated their reasons effectively.   

Candid

Because our advisor is candid, we can trust and believe their advice is in our best interest. As our relationship continues to build, we develop a strong connection.  This ideal chemistry allows our minds to be opened to tough conversations when we are told something with sincere honesty that our way isn’t foolproof.
   
     “That vehicle loan you think you need will financially drag you down. The debt servicing  calculation shows where you stand.” 
        
This takes us to the next quality we should expect from our advisor.

Courageous

Because our advisor is undeniably confident, we can expect them to be fearlessly courageous with us.  Sitting on the other side of the desk in their office or around our kitchen table, we should expect our advisors to be courageously upfront with us even though we may not initially appreciate what they have to say. 

     “It’s going to cost us how much?”

     “You are telling me this is what can happen if I don’t do that?” 

Certainly, the expectation is there’ll be some objections (or pushback) when an idea is first presented.  But here’s the reality, we don’t need someone to appease us.  When they understand our situation and have the courage to tell us, then we are given the right information to make a wise choice.  We don’t have to like what they are saying to understand what they are saying is for our benefit.   

For any business, the two most difficult topics are succession and estate planning.  When business decisions impact an entire family, that’s a different ball game than selling a business and retiring with the sale proceeds.  This is when we expect our advisors to step up to the plate and help create a financial plan for a family business.  

Committed

Because our advisor is 100% committed to us, we feel confident in our decisions.  They presented all the facts, they completed their homework, they developed potential solutions, they explained the benefits and consequences of actions.  They have given their all (skills, knowledge, and expertise). When they hand in the assignment we have given them, then we can grade them on their performance based on our satisfaction. Most likely, they achieve a high mark because of their commitment to us.  When we are at peace with their advice, we can rest knowing our affairs are in order.

It’s a known fact that people in any sales industry (banking, insurance, dealerships, investments, etc.) have sales targets. Advisors who put our interests before their own earn our respect.  Our appreciation grows for the advisor who sets aside the target in the interest of doing what’s best for us.  Knowing our needs matter tells us our advisor is completely committed to doing their best for us. 




Togetherness

The next time you pick up a coin, pay attention to both sides.  You would agree neither side contributes more to its value.  The value is determined in unison. This truth applies to the relationship between our advisors and us.  The value of our joint relationship determines our success in our personal, financial, and business lives.   Neither of us (the advisor or client) should fear honesty because we are afraid of jeopardizing the relationship.  (In fact, the opposite could happen when we are not truthful. Our relationship may be compromised.)

When intentions are sincere and the advice is solid, the outcome will always be positive.  Great advice is directed to help and not harm us.  Regardless whether you are the taker or deliverer of advice, your relationship is built on a foundation of trust and respect and no one should have anything to fear. 


Thursday, September 26, 2019

Takes One To Know One




The rain keeps coming. There's nothing wrong with the rain...except the timing is off for farmers.  September means harvest.  It's not the beginning of September but in a few short days October will be here.  The forecast holds no promises of good weather.  In fact the opposite--rain and snow flurries.  Swaths lie in the field alongside some standing crops.  Not a good news story for farmers whose business depends on getting the grain from the field to the bin. 




Farmers understand farmers; and I fall into this league.  I am switching gears and putting on my farmer cap. My parents were farmers; my husband’s parents were farmers.  And so are we.   We farm in East Central Saskatchewan.


http://www.customcoaters.com/saskatchewan/



At a young age, I was introduced to intricate details of farm life. Pigs and chickens needed to be fed. Cows milked.  Grain hauled from the combine to the bin. Manure pitched by hand from corrals in the summer. Hay and straw bales stacked. If you grew up or visited a farm, you know these intricate details too.   

Yet there’s no place on earth I would rather live, be, and work…than on the farm alongside my husband.  As I look at the calendar, feelings of anxiousness mixed with concern and helplessness overshadow the joys of farming.  Because I am in charge of the bookkeeping for the farm, I can see the financial numbers will not look good when this harvest is done.  






The best we can do is look at our past years’ averages (5 or even 10-year average) and know better years will come again like they did in the past. 

In one of many blog posts, Kim Gerencser writes about the importance of knowing your financial numbers.  Not everyone enjoys the financial side of the farming spectrum but your financial statements tell your story to your bankers. And you also benefit from knowing where you stand financially. 

If you are a farmer, I direct you to Kim’s website, Growing Farm Profits, and encourage you to read his insightful messages.  He always ends with an inspiring call-to-action titled “Plan for Prosperity.”



Comrades do battle together. When we are in the farming trenches, we understand the uncontrollable and unforeseen elements and risks.   The best we can do is equip ourselves with knowledge, skill, and unwavering tenacity.  I might also add a heap of faith.     

Thursday, September 19, 2019

It’s Worth It




“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” ~~ Malcolm X

Whether you are a student looking ahead or an adult looking back, you would agree education is worth money to you.  Your idea of owning “things”, travelling to “places”, giving “freely” to others, or simply paying the “bills”, all rests on the need to have money.  A decent or greater income inspires dreams to happen. 



Our willingness to expand our knowledge and develop our skills molds us into a money-making machine.  We generally don’t see ourselves in this light but the reality is we must generate income to support ourselves financially.  How we choose to do this is entirely our decision.  We can all agree education or on-the-job training contributes to our success. 


Any form of education is never a loss cause. At any age you can switch gears and pick up new skills. An educational course may lead you on the path to becoming an agricultural mechanic, esthetician, or bookkeeper.  You may be focused on a career as a professional accountant, lawyer, or an oncology nurse.  Or perhaps your heart is set on being your own boss; entrepreneurs benefit from business management courses.  In order for your career to turn you into a money-making machine, you will need money to pay your education.  No surprise here. 






If you are the parents of young children, these three phases -- “before”, “during”, and “after” -- can fund a child’s education dream.  

The “Before” Phase. One option to help parents is a Registered Education Savings Plan (RESP).  In a previous article, I asked Have You Started Yet and explained the Canada Education Savings Grant (CESG) adds 20% to your contributions.    Early contributions alongside with the grant will compound with time and interest.  Going this route and having the extra financial assistance is worth it.  

The “During” Phase. Both the parents and students can fund the ongoing costs with a combination of employment income, savings, scholarships, or student loans. The Globe and Mail created this calculator to determine the annual costs. Working through the numbers helps plan an appropriate course of action.  If necessary a student may need to work part-time time and take only partial courses to cover both the tuition and living expenses.  

The “After” Phase. This phase, the “catch-up phase”, is when student loans should be repaid before additional debt is acquired.  The money-making adults are now able to generate income to pay back the loans which helped fund their education. 

The above phases appear most appropriate for young adults; however, I would never discount an opportunity for anyone willing to return back to the books. Certainly building up savings and applying for education loans may be suitable options for any person. With the right mindset anything is possible. Distance learning or educational institutions open the door for people to earn a diploma, certificate, or university degree and set themselves on a new career path. 

Certainly when we witness our income is less than adequate for our needs, we can always learn new skills to increase our earning ability.  Looking outside the box might reveal a clue as to how we can make this happen. We give ourselves permission to snoop around and gaze for an appropriate fit.  Who knows…an interest in a new skill might be discovered. When we discover our calling, we will know the cost of education was worth it.  



If you long to know the right career path for you, you may delve further and ask some soul-searching questions.  Your call to action can be found in this link and aid in your pursuit. The key is to keep hunting for the ultimate job because money matters and so do your dreams. It’s worth it!  

Thursday, September 5, 2019

What Will Your Reality Be?



The realization kicks in around the time we are in our forties.  We feel we have been working endlessly and begin to seriously contemplate retirement.  Will we be financially ready in fifteen or twenty years?  

Up to this point, we haven’t adequately saved.  When we glance at our bank or investment statements, we feel like someone’s been stealing our money.  But the stark reality opens our eyes. We don’t need to worry about anyone stealing our money.  We do a good job of spending it.  When we recklessly spend, we steal money from ourselves.  The harsh reality is we exchange our money for every simple pleasure life offers us now. The practical reality tells us we don’t have to give up living and enjoying life to save money.

Let’s be W-I-S-E about the ways we save and spend while we enjoy life. 

W – Wealth can be built up in multiple ways, both in our investment accounts and home (and other real estate). Putting yourself on “automatic” is the best way to accumulate wealth.  In David’s Bach’s book, The Automatic Millionaire, “automatic” means setting up payments to automatically transfer into a savings plan.  The concept is known as paying yourself first.  The first 10% of your salary belongs to you (to be tucked and hidden away) with the remainder directed to other needs.

I – Investing for the long term is a slow and steady process. We talked about the rabbit and turtle analogy in the previous blog, Connect the Dots.  Because things don’t happen as fast as we would like is not a reason for us to be discontented with the results. Think about someone dealing with a shoulder injury; the healing process cannot be rushed.  A child born today doesn’t graduate from high school tomorrow.  Because you invest $100 a month now, doesn’t convert you into a millionaire in a year.   The world view believes everything should instantaneously happen.  For certain things, like instant oatmeal which cooks up in two minutes or less, this is true but investing in the markets has its own philosophy.

S – Simply spend and borrow wisely. These two need your attention when everyone and everything whisper in your ear, “Why wait when you can have it now?”  Television ads, Facebook posts, and marketers encourage us to part with our money.  If we don’t catch ourselves when temptation knocks, we fall into its trap. 

This point comes from the book, The Automatic Millionaire.

“If we didn’t have enough cash to buy something, we didn’t buy it.  The entire time we’ve been married, we’ve never carried credit card debt. When we used the cards, we paid them off the same month.”

Can you say the same as Sue does?  The interest paid on any unpaid credit card balance squashes dreams.  We don’t want this.  

E – Enjoy life. You are encouraged to dream, the very premise of this blog website. So don’t stop dreaming rather “chase” and “create” the very things you desire to achieve.



Saving for retirement does not require discipline when you heed the advice of making savings automatic. The discipline is only required to set up the process. Your future reality will then take on a life of its own.  The reality of a comfortable retirement is yours to paint in the colours of your choosing.  Do you see the endless possibilities?     

Thursday, August 22, 2019

Money Can Only Buy “Stuff”




When is the last time you stopped to assess your life?  I wonder if your thoughts are the same as mine.  I look around now and am simply grateful.  My possessions might not be glamourous, my clothing stylish, nor my vehicle extravagant, but I feel content. Maybe contentment comes with age, travelling down life’s bumpy trails, or simply with gratitude.   I don’t know the secret prescription to this peaceful contentment drug but I know its importance. From a financial viewpoint, before we kick-start the financial planning process -- the “I want” stuff -- we may be wise to kick-back and evaluate what we have.

Benjamin Franklin said, “Money has never made man happy, nor will it; there is nothing in its nature to produce happiness.  The more of it one has the more one wants.”   



The first step in the financial planning process is to set our objectives and rarely have we ever discussed the things money can’t buy.  Now I begin to believe we should. The list below compiles essential items we often overlook when striving to achieve financial success. Without a doubt, our financial goals are important.  The true objective is to strike a balance.  Getting to the end of our lives and having lost sight of these vital elements to a life well-lived and well-loved would be tragic. 




Recently, I stumbled upon a new perspective.  The material items we consider valuable today will end up in a heap of trash in the future.  We can easily trap ourselves into buying the new refrigerator with a single ice maker from Lowe’s, a gaming laptop from Best Buy, or a reclining leather home theatre sofa from Wayfair.  Enjoying a comfortable lifestyle needs to be weighed with building ourselves and creating meaningful relationships.



Can you see how easily we get caught up in the busyness of “doing” and forget the pleasure of “enjoying”?  We get absorbed in the having more “material stuff” and we lose sight of obtaining the “priceless stuff”.   As these relaxing months of summer come to a close and a new season of goal-setting and achievements pops up, let’s ensure our priorities include the “invaluable stuff”.


Thursday, August 8, 2019

Connect the Dots




Do remember your favorite games and puzzles as a child?  One of my memorable puzzles was “Connect the Dots”; maybe you remember this one too! You drew a line from one number to the next in the correct sequence. And the best part was seeing the image unfold before your eyes. Of course, this happened only if you knew the correct order of the numbers.  When you’re a beginner at counting, this didn’t happen accurately.  The eraser became your best friend for fixing the errors so the perfect image appeared.

I bet you don’t realize you do this puzzle as an adult.  Imagine the years of your life as a series of dots. The line between each year represents the time you work and play at your studies and careers.   And in this space between the dots, you spend and save your money.  Each year holds a series of goals, dreams, and aspirations you strive to accomplish.

Here’s the reality.  Time seems to drag when you strive. Wishing a phase of your life was finished doesn’t help things happen any quicker.   As a medical student, seven years at university seems like an eternity.  As a parent, saving for your children’s educations from the time they’re born seems impossible. Waiting for your mortgage to be paid off seems to be a heavy burden over the span of twenty-five years.

Because things don’t happen as fast as you would like is not a reason to be discontent on your journey.  My mind is stuck on the story of the rabbit and turtle.  (You can say “the hare and tortoise”, if you prefer.)   As long as you know what you want, where you are headed, and how you will get there, “slow and steady” wins the race.



A financial plan, created with your numbers, helps your life’s image unfolded.  All your goals, dreams, and aspirations are on those lines between the series of dots.  You don’t have to wait until your life is complete to know whether you accomplished all of your heart’s desires.   You and your children will be educated; your mortgage paid off; and before long, you will be retired and witness your children experience the same challenges you did.  





The time is now to evaluate whether your numbers are aligned.  Your first step is to evaluate your priorities so you can finish the race.  I need you to imagine you are 105 years old, sitting in a rocking chair at your nursing home and looking outdoors through the window. You have all your faculties you are as smart as a whip. When you look through the window, you imagine watching a movie made of your life; you see all the things you said you wanted to do and you did them. You were not discouraged by believing you were too old, too young or not educated.  You were not concerned about money or any obstacles that might stand in your path.   You said, “I want to do this; and you did!” 


Using a brightly-colored sheet of paper (preferably 8½”x11”), fold the paper four times until you have what looks like a 2”x2” square.  So once you unfold it to its original size, you see sixteen squares on the front and back.  Thirty-two spots to write your goals, dreams and aspirations. The ones you saw played in your movie.  Some may or may not involve money (i.e. learn to play chess, write a book-the cost will be in the publishing, or take winter vacations in Mexico).  This exercise will not be completed in an hour or even one day.  This type of exercise takes time.  Keep your antenna up; see what others have done; if you like what you see, put it on your list. 

Remember you must grasp the pen and write on paper.  Just thinking about your aspirations is not sufficient.  The magic happens in the process of writing your aspirations. Your aspirations are your dots.  

Once this exercise is complete, we can connect the dots and create your perfect image. Are you willing?


Thursday, July 25, 2019

Dealing with Difficult


"What we have once enjoyed deeply we can never lose.  All that we love deeply becomes a part of us." - Helen Keller




“Do what you should do, when you should do it, whether you feel like it or not,” said Thomas Huxley. This go-to-quote has been etched on my brain for those moments when I don’t feel like doing something.  I am propelled to do the things I dread: the mundane tasks, the challenging jobs, and especially the “I’d-rather-not” ones. When unpleasant tasks appear, my reluctance collides with this message. Somehow, it works.  I dig deep and tackle the chore placed before me.

Do you face the same reluctance when confronted with difficult tasks?  Some happen to be more arduous than others.

A week ago my husband and I, along with family members, sat in the front pews of our church.  My mother-in-law’s funeral was both beautiful and sad.  At ninety-one, her life was well-lived and well-loved, filled with both despair and joy, packed with tears, hopes and fears. As we said, “Our Farewells”, I recognized an important detail.  She entrusted her son (my husband) to carry out her final wishes for her funeral service.  Everything down to the last detail was perfectly planned, including the inscription on her remembrance card with the chorus to her favorite song, “You are My Sunshine”.   

The majority of my mother-in-law’s funeral arrangements had been preplanned. We were left only with the final details, which still felt like a lot to handle as we grieved. Even when we expect the inevitable, we cannot adequately prepare for it.  The death of a loved one still catches us off guard and fills our hearts with profound sadness.

So how does a preplanned funeral help?

Concentra Trust, a national trust company specializing in estate and trust solutions, presented a unique perspective about preplanning our funerals.  

“Preplanning a funeral may seem morbid, until the benefits are fully considered. Having family members make decisions while grief-stricken may be traumatic for them, and could also be costly to the estate. Grief, combined with indecision as to the deceased’s wishes may cloud their judgement. Imagine a room filled with expensive orchids and roses and a gold-trimmed ebony casket, when the deceased actually wanted cremation and a memorial service with a simple bouquet of their favourite flowers … daisies.”

When we take the steps to preplan our funerals, we prevent our families from having to guess.  Our funeral instructions provide them with clear directions.   As difficult as this task is (or morbid – as described by Concentra Trust) our focus should be on our family. We do this to ensure the grieving is not harder than it needs to be when they say, “Farewell.”

Below Concentra Trust provides a simple questionnaire for your consideration.  Please take the time to make your wishes known to your family.







Thursday, July 4, 2019

Undetected Fears




Have you ever played doctor and attempted to diagnose your fears? In Suze Orman’s book, The 9 Steps to Financial Freedom, her first crucial step of the financial planning process is to uncover a person’s less-than-obvious anxieties stemming from their first encounter with money. 

The excerpt below, from Suze’s book about her client’s story, will help you consider your own circumstances. 

Suze writes,  

The road to financial freedom begins not in a bank or even in a financial planner’s office like mine, but in your head.  It begins with your thoughts.

And those thoughts, more often than not, stem from our seemingly forgotten past with money.  I’ll go so far as to say that in my experience, most of my clients’ biggest problems in life today – even those that appear on the surface not to be money related – are directly connected with their early, formative experience with money. 

So the first step toward financial freedom is a step back in time to the earliest moments you can recall when money meant something to you, when you truly understood what it could do.  When you begin to see that money could create pleasure – ice-cream cones, merry-go-round rides; and also to see that it could create pain – fights between your parents, perhaps, or longings of your own that couldn’t be fulfilled because there wasn’t enough money or even because there was too much.  When you first understood that money was not just a shiny object or something to color on.  When you understood that money was money.  I want you to think back and see that your feelings about money today (fearing it, enjoying it, loving it, hating it) can almost certainly be traced to an incident, possibly forgotten until now, from your past.


Andy’s Story

If you’ve lost it all, how can you think you have the power to keep money safe, let alone make it grow!

“When I was about eight, my mother gave me ten dollars to go to the bakery to buy bread.  My grandparents and cousins were all coming to lunch, and this was a big deal.  It was the first time that I got to go all the way by myself – down the block, to the right, then across the street all by myself, and down one more block to the corner.  I’d been that way a million times, but never all by myself.  Mom told me how much the bread would probably cost and told me to keep the change in my pocket.  There was all this trust in me, all this responsibility. And what did I do?  Lost it, the ten-dollar bill.  When I got to the bakery: no money in my pocket.  I had no idea what could have happened to it, no idea.  I was late getting home; I looked everywhere.  My grandparents and cousins were already there when I got back; everyone was in the kitchen; there was the noise of everybody talking.  “Where’s the bread, Andy?” my mom said, and I had to say I lost the money.  The room grew so quiet.  Nobody said anything they were all just looking at me.  I didn’t get punished or anything. I think everyone knew how bad I felt, and there wasn’t anything anyone could do.  We had our lunch with the bread basket on the table but without the bread.”

When he and his wife, Leslie came to see me, Andy said, “I was so overwhelmed by that loss, I think I never wanted to be in control of my money after that.”  Leslie had never heard his story before, and even Andy had forgotten about it until we did this exercise together.  But after Andy told the story, everything started to make more sense for both of them.  They had to come to talk about investing for the future, but the two of them could never agree on the kinds of investment they should make.  Most of these disagreements ended up with one or the other of them storming out of the room to the point where they decided they needed professional help.  Leslie wanted to invest aggressively; in their early forties they were young enough, she felt, to take some risks.  Andy, on the other hand, was adamant about putting the money into a bank account, where he said, “it’ll be safe.”  He never understood why investing scared him to death until he made this connection to his past.




From a young age, our experiences contain many twists and turns.  Like Andy, we aren’t certain why we do what we do or why we think the way we think.  A different approach is to ask, “What makes us tick?”  We may not even be aware that our money decisions today are impacted by our experiences from yesterday.


Now it’s your turn. If you can relate to Andy’s story and identify your own experience, you are welcome to share your story (anonymous if you prefer).         



Thursday, June 20, 2019

Knowing What Works Best





Do you remember having a simple conversation over a cup of coffee and being asked “Did you know”?  By chance, did you catch yourself thinking about your own situation?  The phrase, “A little knowledge is a dangerous thing”, can spook people into doing the wrong thing.  When the conversation lands on the cost of settling an estate upon death, a little knowledge will NOT do.   
    
When the term, “probate”, comes up in those conversations, a tiny spark ignites and creates a fire.  Most people desire nothing more than to extinguish the flames caused by probate fees which threaten to torch their estate’s wealth and short-change their beneficiaries.   

But what if...probate costs are not the enemy? What if…the process of probate is intended to get your property into the hands of your intended beneficiary?  Then, the cost might be worth every cent to fulfill your wishes!   


TEST VALIDITY


When you die, the first question generally asked by anyone and everyone, “Did he/she have a will?”  Once confirmed, then the instruction which follows is, “The will needs to be probated.”  

The word probate sounds mysterious, doesn’t it? The formal definition for the noun “probate” refers to “the official proving of a will” and the verb, “establish the validity of a will.”  The term originates from the Latin word “probare” which means “to test, prove” and probatum, “something proved”.  These two combine to create “probate”.  

This makes sense!  The courts test the last Will and Testament of a deceased person to prove its validity and confirm the named executor has the authority to oversee the estate of the deceased.
    
When the court stamps their seal of approval, your family and other third parties (banks, land titles office, brokerage firms) know with certainty the will has been certified and the executor officially has the legal right to distribute or transfer the assets to the beneficiaries as named in your will. 

The application for probate involves the preparation of specific documents.  The website for the Courts of Saskatchewan (under Wills and Estates) provides a list of the required forms.  Generally, most people would seek a lawyer’s assistance in the preparation; however, it’s not a requirement. Most executors, however, discover the task of completing the appropriate forms to be time-consuming and choose to work alongside with the lawyer on the deceased’s estate. 


Once the formality is complete, the courts issue an official document referred to as “Letters Probate”. This important document gives the green light to the executor, appropriate institutions and agencies to follow through with your wishes.  



DETERMINE THE COST

Every estate is not required to go through the probate process.  Specific circumstances will warrant the need for probate such as: the value and types of the assets held in the estate, whether the deceased died without a will, or whether the estate faces legal actions.

In some cases, when all the assets bypass the estate (pass outside the will) probate will not be necessary. Assets held jointly with rights of survivorship are transferred to the surviving joint owner upon the presentation of a notarized death certificate. Likewise, when a designation of beneficiary is named on registered retirement savings and pension plans, life insurance policies, and Tax-Free Savings Accounts, these assets also pass outside the will and do not form part of the deceased’s estate.  Only those assets owned solely by the deceased accumulate in the estate and are distributed according to the instructions in the will.  An executor determines which assets are held inside the will when they complete an inventory list.               
   
The part of the probate process which upsets most people is the associated fees.  The fees are not standardized across Canada rather every province has a different fee structure for administrating probate. Although the term “fee” is used, most see this as a tax fixed by the provincial government and would rather choose to avoid paying the so-called “tax”.  In Saskatchewan, the probate fee is a flat charge of $7 per $1,000 of assets; other provinces impose probate fees at various increments as the value of the estate increases.  Keep in mind, the lawyer’s costs, associated with the settlement of the estate, are in addition to the probate fees. 


PLAN FOR THE RIGHT REASONS



Your will should be designed to satisfy your wishes.  Arranging for all your assets to pass outside your will might not be in the best interest of your beneficiaries or be distributed the way you would hope. 

The concern isn’t when your accounts and real estate are held jointly with your spouse or when your spouse is designated as your beneficiary on registered retirement or pension plans and life insurance. The concern is when the person is anyone other than your spouse, most likely your children.  (The situation becomes complicated when you make your property joint with a second spouse and your original intent is to leave property to the children from your first marriage. You can’t give away something you don’t own.)    

Many factors attribute to the overall picture.  Your main focus may be to avoid probate fees.  However, your strategy without legal and tax advice could prove to be fatal.  Watch closely if any flags wave, “Proceed with Caution”.

Concerns raised in a previous blog, Joint Tenancy as an Estate Planning Tool,  are still the same today.  When you opt to include someone on your investment accounts or title of real estate property, you give up full control and now share the ownership of these assets with the another person. The drawback with joint names on property is you would require the other’s consent if you decide to sell.  The downside--they may be reluctant to oblige.   Another concern is the possible tax implications. In the eyes of Canada Revenue Agency (CRA), you are disposing of half of your interest.  The strategy may trigger a tax liability in the same way as if you sold your interest to any outsider.   Always check with your accountant or lawyer to ensure your strategy to minimize the probate fees on your estate is justifiable and in your best interest.

Cash held in an estate could be used to cover the cost of the probate fees and final estate expenses. A life insurance policy could be used for this purpose.  Literally, the insurance acts as a “life saver” in circumstances when a sizeable estate is owned solely by the surviving spouse and the number of beneficiaries is significant. The assets are able to flow into the estate and the death benefit from a life insurance policy can help cover the final costs. Once all the expenses are paid, when the dust settles, then the assets and remainder of the estate can be shared as outlined in the will instructions.  This creates a more equitable distribution among the beneficiaries.   


INFORM YOURSELF 



At the beginning, I mentioned, “A little knowledge is a dangerous thing”.  BUT I also believe knowledge is power.  A wealth of information is available about probate.  An entire chapter has been dedicated to this subject in Sandra E. Foster’s book, You Can’t Take It with You.  Another valuable resource is the website of The Public Legal Education Association of Saskatchewan (PLEA).   They contribute extensive details on Wills and Estates. Our important takeaway from all this knowledge is to fully grasp how this applies to our unique circumstances. 



Although many would prefer to reduce the cost incurred with the settlement of their estate, this may not be possible.  Our desire should rest on making the right decisions.  Our sincere intentions guide us to search for suitable strategies.  Probate and legal fees may be necessary to appropriately execute our wishes and ensure our family members are treated equitable.  Walking through the many possibilities with a professional advisor is the ideal course of action to achieve the best outcome.  For our benefit, the call to action is to be informed.