Do you need an estate plan?

Managing your finances raises a number of topics but none as tricky and potentially unpleasant as planning for your family and finances in the event that you pass away or become incapacitated. Understandably, these questions are often ignored by many—but don’t fall into the trap of avoiding these difficult matters. Good estate planning will help to make sure that your wishes are carried out, and your family and assets are well protected.

With this in mind, let’s take a look at the key areas that you should consider when designing your estate plan:

  • Choosing a guardian – One of the most important considerations is who you select to become the legal guardian of your children. This is a very personal and complex decision, and you will consider several unique factors depending on your circumstances, but your principal concerns might be how physically able the person is to look after your children, as well as such practical matters as how close they live to you and their personal and financial situation and stability.

  • Life insurance and trusts – Life insurance gives your family the financial security to continue their standard of living and fulfil their dreams in the event that you are unable to provide for them yourself. Life insurance payouts can be used in various ways, including paying off debts, paying for college education, or simply helping with general living costs.

 

A trust is a way of specifying how and when you wish to pass money and other resources to your children. It can be an excellent way of ensuring that their inheritance reaches them before the age of eighteen or twenty-one, unlike a court-controlled process, as you will stipulate who manages and distributes the funds.

·      Choosing someone to make decisions on your behalf

It is crucial to make sure that somebody trustworthy is nominated to manage and distribute your various assets according to your wishes. This executor can be anybody, though spouses, older children, or close friends are often common choices. Similarly, if you become too sick to make your own decisions about your finances or your family’s care, a health care directive and a power of attorney will give you peace of mind and go a long way towards protecting your assets.

Now that we understand the key areas that should be considered in estate planning, here are some of the important components or documents involved in the process:

·      Will, trusts, and beneficiary forms

Both a will and a trust should detail your assets and how you wish them to be distributed when you die, as well as assigning the guardians of your children. However, one benefit that a trust has over a will is that a trust does not have to go through probate prior to being executed, as well as the option of coming into effect before you pass away; it remains under your control and transfers the role of trustee to someone else when you decease.

 

Beneficiary forms are slightly different. They assign designated beneficiaries to specific financial accounts such as mortgages and bank accounts. As this information holds more legal weight than a will itself, it is crucial to regularly ensure that your beneficiaries are up to date.

 

·      Durable powers of attorney

The term power of attorney refers to the person, or persons, that you nominate to act on your behalf in the event that you are too ill to state or carry out your own wishes. There are various ways to implement this; you can choose specific individuals for particular roles, such as one person to look after your finances and another to make your healthcare decisions, or you can designate one person full power of attorney to manage all of your affairs.

 

·      A living will

Not to be confused with a last will and testament, a living will details the type of medical treatment that you wish if you were ever incapacitated. Along with a general or healthcare power of attorney (see above), this document is known as your advance health care directive, and it not only provides you with peace of mind that your medical wishes will be respected, but it also gives direction and support to your family when faced with difficult decisions about your care.

 

·      Letter of intent

This document is not legally binding and can offer a more personal touch alongside an official will or trust. As the letter is less formal and binding than other documents, many people use it to express their wishes about more personal aspects such as their requests for funeral arrangements, or even preferences and desires for how their family should be brought up.

As with any financial arrangement, changes over time, not only in process and legislation but in your own personal situation, mean that it is imperative to keep your estate planning strategy under review and regularly updated to ensure it’s fit for its purpose and accurately reflects your wishes. 

The importance of a suitable travel health insurance policy

The importance of taking out a robust travel health insurance policy, which is appropriate for your needs cannot be underestimated if you plan to travel outside of Canada, no matter where to or for how long. Naturally, there are many different types of product on the market and therefore decisions have to be made in relation to the type of cover that you require but, as a minimum, you should consider taking out health, life and disability coverage so that you don’t get caught out for medical treatment in other countries, should an accident or illness strike. Additionally, it is worthwhile taking out insurance for flight disruptions, lost luggage and documents etc. if you are flying, as such incidents can be costly and inconvenient.

Why do I need travel health insurance?

Some people mistakenly believe that their Canadian provincial or territorial health policy will cover them if they fall sick abroad, but this is almost certainly not the case. Check the small print of your policy to make sure that you understand exactly what you are and aren’t covered for before taking a trip and arrange appropriate additional cover where required. It is not unknown for hospitals in other countries to refuse treatment for patients who do not have health cover or, if they do treat you and you are uninsured, you could be facing a substantial hospital bill which takes you years to repay.

How do I choose my travel health insurance policy?

There are lots of factors to consider when selecting the most suitable plan for you and you should not be afraid of asking questions in order to determine the exact scope and coverage of the policy before committing to it.

Some areas to consider include the following:

  • The length of the policy – whether it is continuous, its maximum duration and whether or not you can renew it from abroad if necessary.

  • Whether medical costs are paid directly to the health provider in the country of the incident or whether you have to pay directly and are then subsequently reimbursed by the insurer.

  • The extent to which the policy covers pre-existing medical conditions. This is a really important area which should not be skimmed over as failure to ensure the exact terms of how pre-existing conditions will be treated could result in them only being partially covered, or even being excluded altogether. Specifically ask for:

    • A full list of the definitions, limitations and restrictions relating to your pre-existing condition.

    • An agreement in writing confirming that your pre-existing condition is covered.

    • A stability clause which details that no changes should be made to new or existing medical conditions, symptoms or medication during the stability period before your trip.

    • A compassion clause so that the whole policy isn’t invalidated due to an inadvertent incorrect statement.

  • Whether or not the cover provides medical evacuation back to Canada, with a medial escort if required.

  • That your medical care abroad and any remote telephone support with the insurance provider is in English.

  • How deductible costs are dealt with – going for a 100% coverage plan, though more expensive, gives you greater peace of mind and financial back up should the worst happen.

  • In the event that you die abroad, whether your cover will pay for the preparation and return of your remains to Canada.

How do I make sense of my travel insurance policy?

It’s imperative that you read and understand the terms of your policy so that you are fully prepared in case you have to use it.

When taking out your policy, make sure that you give honest, accurate and complete information as failure to do so can invalidate your policy. Ask all of the questions that you need to get assurance that the product meets your needs fully and ask for confirmation in writing for any areas of dispute or uncertainty.

There are a number of things that are not normally covered by insurance companies, so you should check with your provider directly if they affect you. Activities such as extreme sports or treatment for cosmetic surgery or incidents as a result of drugs or alcohol are often not covered by the insurance.

Make sure that you check the Travel Advice and Advisories website both when you are booking your trip and also just before you leave. The purpose of this is to ensure that no Travel Advisories have been issued for your destination as this is likely to impact your insurance policy and it may even be the case that your provider will not cover medical treatment undertaken in a country for which the Government of Canada has issued an official Travel Advisory.

Don’t forget to make sure that your medical paperwork is in order if you do end up having treatment abroad. As a minimum, you’ll need a thorough medical report with a breakdown of the treatment that you have received, with an invoice or receipt. If in doubt, request additional information to safeguard against queries or potential hold ups when it’s time to make your claim

Finally, keep your insurance documents on you or easily to hand when you travel and also pass on the details of your policy to somebody else such as a family member or your travel agent in case they need to act on your behalf in an emergency.

Remember that preparation is key when it comes to taking out a travel health insurance policy and with good planning, there is no reason why you won’t be able to secure a robust policy which meets your needs and gives you the necessary financial and emotional security to enjoy your trip.

Do you REALLY need life insurance?

You most likely do, but the more important question is, ‘What kind?’ Whether you’re a young professional starting out, a devoted parent or a successful CEO, securing a life insurance policy is probably one of the most important decisions you will have to make in your adult life. Most people would agree that having financial safety nets in place is a good way to make sure that your loved ones will be taken care of when you pass away. Insurance can also help support your financial obligations and even take care of your estate liabilities. The tricky part, however, is figuring out what kind of life insurance best suits your goals and needs. This quick guide will help you decide what life insurance policy is best for you, depending on who needs to benefit from it and how long you’ll need it. 

Permanent or Term? 

Life insurance can be classified into two principal types: permanent or term. Both have different strengths and weaknesses, depending on what you aim to achieve with your life insurance policy. 

Term life insurance provides death benefits for a limited amount of time, usually for a fixed number of years. Let’s say you get a 30-year term. This means you’ll only pay for each year of those 30 years. If you die before the 30-year period, then your beneficiaries shall receive the death benefits they are entitled to. After the period, the insurance shall expire. You will no longer need to pay premiums, and your beneficiaries will no longer be entitled to any benefits.

Term life insurance is right for you if you are: 

  • The family breadwinner. Death benefits will replace your income for the years that you will have been working, in order to support your family’s needs.

  • A stay-at-home parent. You can set your insurance policy term to cover the years that your child will need financial support, especially for things that you would normally provide as a stay-at-home parent, such as childcare services.

  • A divorced parent. Insurance can cover the cost of child support, and the term can be set depending on how long you need to make support payments.

  • A mortgagor. If you are a homeowner with a mortgage, you can set up your term insurance to cover the years that you have to make payments. This way, your family won’t have to worry about losing their home.

  • A debtor with a co-signed debt. If you have credit card debt or student loans, a term life insurance policy can cover your debt payments. The term can be set to run for the duration of the payments. 

  • A business owner. If you’re a business owner, you may need either a term or permanent life insurance, depending on your needs. If you’re primarily concerned with paying off business debts, then a term life insurance may be your best option. 

Unlike term life insurance, a permanent life insurance does not expire. This means that your beneficiaries can receive death benefits no matter when you die. Aside from death benefits, a permanent life insurance policy can also double as a savings plan. A certain portion of your premiums can build cash value, which you may “withdraw” or borrow for future needs. You can do well with a permanent life insurance policy if you: 

  • …Have a special needs child. As a special needs child will most likely need support for health care and other expenses even as they enter adulthood. Your permanent life insurance can provide them with death benefits any time within their lifetime.

  • …Want to leave something for your loved ones. Regardless of your net worth, permanent life insurance will make sure that your beneficiaries receive what they are entitled to. If you have a high net worth, permanent life insurance can take care of estate taxes. Otherwise, they will still get even a small inheritance through death benefits.

  • …Want to make sure that your funeral expenses are covered. Final expense insurance can provide coverage for funeral expenses for smaller premiums.

  • …Have maximized your retirement plans. As permanent life insurance may also come with a savings component, this can also be used to help you out during retirement.

  • …Own a business. As mentioned earlier, business owners may need either permanent or term, depending on their needs.

A permanent insurance policy can help pay off estate taxes, so that the successors can inherit the business worry-free. Different people have different financial needs, so there is no one-sized-fits-all approach to choosing the right insurance policy for you. Talk to us now, and find out how a permanent or term life insurance can best give you security and peace of mind. 

Long Term Care

Long-Term Health Care: 3 Things You Should Know

At some point, you’re going to need help doing basic daily activities you may take for granted. Even if it seems like a distant reality, the day you’ll need long term health care will eventually arrive, and you better start planning for it now. 

Here are 4 things you need to know.

1. It is inevitable. Seven out of ten people older than 65 will need custodial care in doing their day-to-day tasks, according to recent statistics. Long-term care becomes necessary when a person needs help with at least two basic tasks such as eating or taking a bath. 

2. It can be expensive. A lot of people take for granted the need to plan their long term care expenses, believing that this will be taken care of by the government. This, however, is not always true. Living in a semi-private nursing home may cost you around $73,000 each year, according to 2012 data. For private nursing homes, it may go up to around $81,000. These prices will most likely increase in the near future. 

3. Preparing for it is best thing you can do for yourself before you retire. Through a long-term health care insurance policy, you can start preparing for the kind of long-term care you will need, depending on your needs and lifestyle. Aside from getting your other retirement benefits in order, an insurance plan that includes assisted care after retirement means less worries in the future. Think of it as an investment for your own peace of mind, as well as your loved ones’.

4. There is no better time to start than NOW. The sooner you start, the more you can maximize a long-term care insurance policy. The premiums you pay will depend on a few factors:

  • How old you are
  • Your current health status
  • How long you think you’ll need coverage
  • How much you want to protect yourself from inflation.

With inflation protection, the value of your benefits can even increase over time. With a 5-percent inflation protection in place, for example, the value of your insurance benefits will increase by 5 percent as well.

While your family may be there to also support your needs, it is important to think about how you’ll live the rest of your years after without breaking the bank or financially burdening loved ones. Think about how old you think you’ll be when you need assisted care, or what financial safety nets you have in place in case of disability. 

Talk to us, and find out what long-term health care insurance benefits will best suit your plans and needs.

Ontario Budget 2018

The 2018 Ontario budget features a number of new measures and billions of dollars of enhanced spending across the spectrum, as announced by the province’s Finance Minister, Charles Sousa. Read on for some of the key proposals.

Personal

Eliminate Surtax

A new sliding scale for personal income tax will be introduced, with seven personal income tax rates which will be applied directly to taxable income, in an attempt to eliminate Ontario’s surtax. The province estimates that approximately 680,000 will pay less tax as a result.

Free Tuition

Access to further education will be income linked, with those families with an income of less than $90,000 per year receiving free tuition and families with an income of between $90,000 and $175,00 per year receiving financial aid for tuition costs.

Free Pre-School Child Care

Effective in the Fall of 2020, children aged two-and-a-half until they are eligible for kindergarten can receive free licensed child care. 

New Ontario Drug and Dental Program

For those without workplace benefits or not covered by OHIP+, this program offers up to 4.1 million Ontarians a benefit that pays up to 80% of expense up to a cap of $400 for a single person, up to $600 for a couple and $50 per child in a family with two children, regardless of their income.

Free Prescription Drugs

The budget announces the introduction of free prescription drugs for those aged 65 or older, resulting in an average of $240 per year in savings per senior.

Charitable Donation Tax Credit

The non-refundable Ontario Charitable Donation Tax Credit will be tweaked to increase the top rate, remaining at 5.05% for the first $200 but increasing to 17.5% for anything above $200.

Seniors’ Healthy Home Program

$750 is offered to eligible households with seniors of 75 years of age or older to help them to care for and maintain their residence.

Corporate

R&D Tax Credit

The budget introduces a non-refundable tax credit of 3.5% on eligible costs relating to R&D, or an enhanced rate of 5.5% for eligible expenditures of $1 million plus. Note that this enhanced rate would not be payable to corporations where eligible R&D expenditures in the current tax year are less than 90% of eligible R&D expenditures in the tax year before.

Innovation Tax Credit

The existing Ontario Innovation Tax Credit will see changes to its credit rate in the following way:

·      If a company has a ratio of R&D expenditures to gross revenues of 10% or less, they will continue to receive the 8% credit.

·      If their ratio is between 10% and 20%, they will receive an enhanced credit rate of between 8-12%, calculated on a straight line basis.

·      If their ratio is 20% or more, they will receive an enhanced credit rate of 12%.

Ontario Interactive Digital Media Tax Credit

Eligibility to receive this tax credit will be broadened to include film and television websites.

2018 Federal Budget Highlights for Families

Several key changes relating to personal financial arrangements are covered in the Canadian government’s 2018 federal budget, which could affect the finances of you and your family. Below are some of the most significant changes to be aware of:

Parental Leave

The government is creating a new five-week “use-it-or-lose-it” incentive for new fathers to take parental leave. This would increase the EI parental leave to 40 weeks (maximum) when the second parent agrees to take at least 5 weeks off. Effective June 2019, couples who opt for extended parental leave of 18 months, the second parent can take up to 8 additional weeks, at 33% of their income.

Gender Equality

The government aims to reduce the gender wage gap by 2.7% for public servants and 2.6% in the federal private sector. The aim is to ensure that men and women receive the same pay for equal work. They have also announced increased funding for female entrepreneurs.

Trusts

Effective for 2021 tax filings, the government will require reporting for certain trusts to provide information to provide information on identities of all trustees, beneficiaries, settlors of the trust and each person that has the ability to exert control over the trust.

Registered Disability Savings Plan holders

The budget proposes to extend to 2023 the current temporary measure whereby a family member such as a spouse or parent can hold an RDSP plan on behalf of an adult with reduced capacity.

If you would like more information, please don’t hesitate to contact us.