Winter 2012

When your children blew through their allowance as if it was burning a hole in their pockets, you thought it was just a phase. Away at school, the calls for cash infusions kept coming and the credit card bills kept climbing. Sure you can afford it, but that’s not the point. With a sizeable inheritance coming their way, how can you make your kids more fiscally responsible?.

“One of the biggest issues I see with young people today is not having a sense of what is realistic for their financial situation. Too many assume that they can live their parent’s lifestyle now, without putting in the time and hard work to build up their earning power,” says Paul Gainor, Consultant with T.E. Wealth in Calgary. He explains that parents aren’t doing their kids any favours by always coming to the rescue. In this case, he recommends that the parents start by setting some limits.

Fall 2011

Spurred on by low rates and easy access, Canadians today are carrying more debt than ever before. But is this really such a bad thing? The answer lies in your age and stage of life and the overall health of your financial plan. For some, debt is a four-letter word that spells misery. For others, it’s the key to opportunity and building wealth. One thing is for certain; debt levels in Canada have hit historic proportions. Household debt in Canada reached a record $1.5 trillion in the first quarter of 2011, with the debt-to-income ratio hitting a staggering 146.9%. If that amount was spread equally across all Canadians, a family of four would owe $176,461.* With warnings coming from the Bank of Canada, the federal government and the International Monetary Fund, there is growing concern about the high level of debt and its effect on the long-term financial security of Canadians.

Fall 2011

Introduced in 2009, Tax-Free Saving Accounts (TFSAs) give every Canadian resident age 18 and older the opportunity to invest $5,000 per year tax-free. By 2011, a couple could save $30,000 and not pay any tax on the investment earnings! Top up TFSAs now and then make your 2012 contribution of $5,000 on January1st. Students, who are 18 or older, can withdraw $5,000 from their RESP each year and contribute the money to a TFSA. The funds grow tax-free and can be used for any purpose in the future.

Fall 2011

A couple of years ago, you thought your retirement plan was bulletproof. But with the downturn in the economy and the threat of a downsizing at work, now you’re not so sure. Is there anything you can do to feel more secure?

November 2011

Discover what you can be doing tax-wise throughout the year with our helpful checklists. If you want to make staying on top of your taxes even easier, have your T.E. Wealth consultant prepare and file your family’s income tax returns.

Summer 2011

When it comes to reasons for procrastinating, planning for the distribution of your estate may top the list. Few people want to contemplate their ultimate demise, never mind discuss what happens to all of their worldly goods. Yet putting off looking after what and whom you leave behind can be a nagging concern. Without instructions and proper documentation, the courts may have to make decisions for you. Our checklist for success gets you started with small steps, moving on to more sophisticated strategies depending on your situation. What’s most important is that you don’t delay. Plan to review this checklist with your T.E. Wealth consultant right away.

Spring 2011

If you’ve been following the financial press of late, it would appear that the bloom is off the Registered Retirement Savings Plan (RRSP). Once lauded as the best way for Canadians to save for their retirement, there are cracks now appearing in the RRSP’s appeal. Depending on where you sit in terms of income and age, the RRSP can be your retirement saviour or a Faustian bargain with Canada Revenue Agency. For sure, the RRSP offers the tempting combination of tax-deductible contributions to reduce income taxes today and tax-deferred investment growth to boost your plan’s value. But it also demands that any money coming out of your RRSP is taxed as regular income. And it is this latter requirement that has people rethinking their RRSP strategy.

Spring 2011

Concerned about taxes? Worried about preserving your estate? Want to make sure inheritances are used wisely? A properly executed trust may be the answer for you.

Trusts, whether they are inter vivos (created while you are living) or testamentary (created through your will after death), are highly effective instruments for achieving precise tax and estate planning goals. On the tax front, trusts can be used to reduce current income tax or lower probate fees and preserve assets in your estate. In addition, trusts can be used to provide financial security for dependent beneficiaries or ensure inheritances are protected. T.E. Wealth has helped many clients achieve these goals through the proper execution of trusts. Keep in mind that the availability of, and rules governing, trusts vary based on provincial jurisdiction. Your T.E. Wealth consultant can help you assess the suitability of a trust for achieving your particular goals.

Spring 2011

At T.E. Wealth, we are continually looking for new ways to be of value to our clients. As clients plan for lifestyle and life stage transitions that come with retirement, or experience age and health-related changes, additional services are needed. While the delivery of these services may extend beyond the traditional in-house expertise of a financial services firm, planning for them does not. As particular needs are identified by our consultants through the comprehensive planning process, we have often been able to provide clients with customized solutions. Recently, we have taken a closer look at one such area, medical concierge services, to see if these might be of interest to our clients.

Winter 2011

Despite a last-minute reprieve for the Bush-era estate tax cuts, Canadians who own property south of the border are well advised to assess their situation and plan accordingly.

In the United States, from an estate tax perspective, 2010 was a good year to die. Wealthy Americans, such as New York Yankees owner George Steinbrenner and Cargill Inc. heiress Mary Janet Cargill, had their billion-dollar estates escape U.S. estate tax. The same fate applied to wealthy Canadians who died before January 1, 2011 and whose ownership of U.S. real property (real estate and stocks of U.S. companies) would have exposed them to U.S. estate tax. Despite a reinstatement for 2011 and 2012 of the lower estate taxes carried over from the Bush regime, if you own U.S. property, the impact of U.S. estate tax on what your heirs receive can still be substantial. It all depends on your worldwide assets at death and the proportion of those assets that are considered to be property in the United States.

How to make the most of tax-sheltered investing The next best thing to not paying tax on your investment earnings is deferring the tax until later. Either way, you can boost the potential gains from investing your money, whether those gains come as interest, dividends or capital gains. By keeping more of your investment earnings …

Summer 2007

Avoid these all-too-common estate planning pitfalls.
If you’re looking to tear your family apart, there’s no better way than having your will contested. Not only can this exceptionally delay the settling of your estate, possibly causing your heirs financial hardship, it can forever damage relationships between feuding family members. Blood may be thicker than water but matters of money seem to trump all. You have the right to distribute your assets in any way you wish but keep in mind that the following areas can be contentious.

When making money is short and sweet Few professional athletes are renowned for their money management skills. Sure there are exceptions. Magic Johnson comes to mind. But all those years spent focused on honing their skills in their respective sport, left little room for financial education. In 2009, Sports Illustrated reported that after two years …

Summer 2010

What to consider when deciding when to start receiving CPP*

T.E. Wealth Strategies first reported on the then-proposed changes to the Canada Pension Plan in the Winter 2010 issue. Now that those changes have been given royal ascent, people are wondering what they should do. Should you take CPP early, even though the discount for early payment has increased? Or would you be better off to continue to work and contribute to the plan to receive an enhanced payment at age 65 or later?

Summer 2010

New rules for the taxation of stock options could mean a rethink of your financial plan.

Stock options have always been a great compensation tool for motivating the executives and key employees who can make a significant difference to how the company and its stock perform. The theory goes that by giving employees and executives a financial stake in the company’s future, they will make decisions and efforts that will positively affect the company’s financials and, ultimately, its share price. For the most part, this arrangement has worked well and stock options have been considered an attractive perk. A little bit of that attractiveness is being eroded with new taxation rules effective in the 2010 tax year.

Spring 2010

In today’s world of employment uncertainty, before you sign or resign, make sure you know what you are entitled to.

If you’ve seen the academy-award nominated film Up in the Air you’ve had a glimpse into the world of modern corporate downsizing. Interspersed between the actors are interviews with Americans who had recently lost their jobs. At times the movie is funny, poignant and painful, but anyone who has been through this process personally will tell you that it’s more likely to be painful than poignant and it is never very funny. A timely release, Up in the Air, effectively captured the devastating job losses that have characterized this recession, and tapped into our collective anxiety about the precarious nature of modern-day employment.

Getting back on track with a post-divorce recovery plan According to Statistics Canada, 38% of married couples will get a divorce before their 30th anniversary. There can be many reasons for getting a divorce but being better off financially isn’t usually one of them. The old adage that two can live as cheaply as one …

Winter 2010

With RRSP contributions due in just a few weeks, we’re in the season of what can only be described as ‘retirement excess’. You know – advertisements that show grey-haired 70-somethings living the good life, whether it is surfing in Hawaii, globetrotting in luxury or riding off into the sunset on their Harley Davidsons. These ads promote a vision of retirement that is far from reality for most people and perpetuate many of the myths that can undermine planning for a successful retirement. What’s more these ads encourage the notion that a successful retirement is all about money. While having adequate income in retirement is clearly important, having a successful retirement depends on much more. If looking after the financial aspect of retirement is all the retirement planning you do, you could be dissatisfied with how your retirement turns out.

Winter 2010

New Canada Pension Plan rules could change your plans.

Last year, the Federal government introduced changes to the CPP that will begin taking effect in 2011. The changes are a result of the regular review of the CPP that federal, provincial and territorial Ministers of Finance are required to conduct every three years. These amendments are, in Department of Finance Canada’s own words, “intended to modernize the Plan to better reflect the many different paths people take to retirement.” Here is a summary of the changes:

Winter 2010

Act now to create lasting memories with your family and friends that will live on long after you are gone.

Videocassettes gather dust. Photos fade. Hard-drives are mysteriously erased. But memories, happy memories, live on in the minds of those who made them. A conversation that begins with “Remember when we…” usually ignites a series of fond memories and warm feelings. But with today’s busy lifestyles, it’s hard enough just to be in the moment, let alone capture it for posterity. How do you get enough time with your growing children or grandchildren to create a legacy of memories? That’s a question that Valerie Pippy, Senior Vice President, T.E. Wealth in Toronto, has been helping some of her clients answer.

Fall 2009

Financial planning and the education that goes along with it are a lifelong affair.

The upheavals in the markets last year made a compelling case for financial re-planning – the process of revisiting your financial plan from time to time to make sure you are still on track. As many discovered, a downturn in the markets, no matter how temporary, can have substantial impact on your progress towards realizing your goals. But market conditions are not the only reason for reviewing your financial plan. Life events such as marriage, the birth of a child, a change in career, divorce, retirement and death of a partner are all circumstances when you would be wise to revisit your financial plan and make any necessary updates. As a result, many financial professionals view the process of financial planning as something you carry on throughout your life.

Fall 2009

Plan ahead for sustainable withdrawals to make sure your money lasts.

If people could only be certain of how long they would live, planning for retirement income would be a whole lot easier. One of the greatest fears among retirees is that they will outlive their money. But longevity is only one of the variables that influences how long your money will last. Other factors include the rate of return you earn on your investments, the time-path sequence of returns, the rate at which money is withdrawn and how inflation erodes your purchasing power. That’s a lot of variables to consider, which only reinforces the importance of having a strategic plan for taking income from your investments.

Summer 2009

The financial crisis that has sent asset values tumbling could have profound implications for your estate plan.

As one of the worst performing years for markets since the Great Depression, 2008 has left many feeling poorer than they did a year earlier. As if to add insult to injury, the early part of 2009 saw values decline even further. During this period, you could look at just about every asset class and find that prices had dropped significantly. While there has been some rebound in values lately, everything from investment portfolios and real estate holdings to privately owned businesses and philanthropic funds are still off from their previous highs. In times such as these it pays to re-evaluate your estate plan. What made sense when markets were at their peak, may no longer be appropriate. Furthermore, the downturn could provide an opportunity to reduce the amount of tax your estate will have to pay.

Summer 2009

Whether you are lucky enough to have an employer-sponsored pension plan or Group RRSP, or are saving for retirement on your own through personal savings, the current economic climate is cause for concern. Major market losses, sustained low interest rates and a weak economy could mean that you’ll have less for retirement than you thought. Make sure you know where you stand – now’s the time to assess your situation and, if necessary, chart a new course.

Income splitting just keeps getting better Looking for ways to lower your household’s income tax bill? If you and your spouse or partner have different marginal tax rates, income splitting can help you realize substantial tax savings. The goal is to have income taxed at a lower marginal tax rate and with recent developments the …

Five ways to gain with TFSA’s Although you’ve been hearing about them for months, Tax-Free Savings Accounts (TFSAs) finally became available on January 1, 2009. At first glance, with a modest annual contribution limit of $5,000, TFSAs may appear to be not worth the effort. Amidst all of the hype and advertisements, T.E. Wealth has …

Rethinking retirement If falling equity markets and a slowing economy have you wondering whether you can retire on time and in keeping with your plan, you’re not alone. Here’s what our experts recommend you do. Call it a rude awakening or a painful reality check. Just about everyone is opening their investment statements and seeing …

How a perfectly crafted estate plan can go wrong Your estate plan can work technically. And it can work practically. But if it doesn’t work emotionally, it may not work at all. Jordan M. Atin knows a thing or two about estate plans that don’t work. As a Certified Specialist in Estates and Trusts Law …

Education savings revisited With new rules and new options, your education savings strategy may need a makeover. Discover how to make the most out of revamped RESPs, set aside the funds for graduate or professional studies and take advantage of the new Tax-Free Savings Accounts. New rules for Registered Education Savings Plans were introduced in …

Is a family foundation right for you? Once believed to be the domain of only the very wealthy, private foundations are getting a common touch as more and more Canadians discover a great way to give. Foundation-based philanthropy is on the rise in Canada. Perhaps it’s the influence of high-profile philanthropists such as Bill and …