One of my clients is aging. OK, we are all aging but she is aging to a point where she wants to be responsible for what happens after she leaves us. Her name is Edith. Edith has accumulated many things during her tenure, here, on Earth, and she has given much thought as to who she would like to see get which trinket or object of perceived value. To her beneficiaries the value may be extrinsic as it will always produce a fond memory of Edith, herself, but does the object have any intrinsic value? How can Edith divide her wares on an even basis to her beneficiaries from an Earthly value perspective?
This weekend I was in a business coaching session and I happened to be sitting next to a woman who would provide a perfect resolve for Edith's dilemma. Barbara is her name and Barbara's specialty is to value vintage jewelery. I thought of Edith right away. What a perfect solution to have such an expert peer through Edith's jewelery collection and make note of any hidden gems?!
Personal Effects Memorandum's are often attached to Wills. They are not legally binding but they do disclose a 'wish' on the part of the deceased to have certain items go to particular people. With full knowledge of her hidden gems and their approximate value Edith could write her own Personal Effects Memorandum and also ensure she is being fair about the value of her gift far beyond the memory of Edith, herself.
If you are interested in getting in touch with Barbara about her specialty, please let me know I will put you in touch!
Happy Planning.
Thursday, January 27, 2011
Wednesday, January 19, 2011
Divorce ~ Save some money and get some clarity.
Fred and Bette were both hurt. Their feelings of betrayal, loss of trust and the sense that the person who was to be the partner in your life is not only no longer fulfilling that role but also they have become a third party. Through their negotiations they felt suspicious of one another when dealing with the financial issues, child custody and child access issues that they needed to resolve. With so much at stake visions of increased, indeterminable professional fees loomed.
Fred and Bette were confused by the complexity of their financial situation. Without the necessary complicated financial software Fred and Bette were struggling with issues such as lump sum versus spousal support payments, the difference between taxable and non-taxable assets. Who want the house and who can afford to keep it? Should retirement assets be swapped for real estate holdings ~ is it beneficial to be house rich and retirement poor? What happens to Bette's stock options?
How could Fred and Bette have saved a bunch of money? They could have had a financial professional, who specializes in divorcing clients, calculate their financial situation. Not only would it have saved on some legal fees but it also would have given them a more concrete visual picture of their lives apart from one another. Often divorcing people do not want to gouge their soon-to-be-ex but rather they want the best result for both themselves and their ex-partner.
Something to think about, eh?
Fred and Bette were confused by the complexity of their financial situation. Without the necessary complicated financial software Fred and Bette were struggling with issues such as lump sum versus spousal support payments, the difference between taxable and non-taxable assets. Who want the house and who can afford to keep it? Should retirement assets be swapped for real estate holdings ~ is it beneficial to be house rich and retirement poor? What happens to Bette's stock options?
How could Fred and Bette have saved a bunch of money? They could have had a financial professional, who specializes in divorcing clients, calculate their financial situation. Not only would it have saved on some legal fees but it also would have given them a more concrete visual picture of their lives apart from one another. Often divorcing people do not want to gouge their soon-to-be-ex but rather they want the best result for both themselves and their ex-partner.
Something to think about, eh?
Wednesday, January 5, 2011
A Legal Means to Avoid Paying the Tax Man.
Who wants to pay tax when you don't have to, right?
I know I certainly do not so as soon as the clock struck midnight on December 31 I sent a message to my administrators asking them to transfer $5,000 from my non-registered accounts to my Tax-Free Savings Account (TFSA).
I really do not like the name the government gave to this tax-free haven as it's title often misrepresents the benefits. It's not a savings account, per se. It can be an investment account so that you can put any stocks, bonds or mutual funds into your TFSA and any interest income, dividends and capital gains you receive are not subject to tax! Calling it a 'savings account' has led clients to believe that you have to put the funds in a 'savings account' at the bank earning today's low rate of interest rather than use a more effective investment strategy and they tend to dismiss this strategy all together. What a missed opportunity!!!
What's even better is that if you have come into a windfall in 2011 and have not been contributing over the past 3 years you can catch up and put in $15,000 all at once! The rules are that you can contribute $5,000 per year from 2009. Unlike a RRSP you will not receive a tax deduction for your contribution but when you take the money out it isn't taxable income either (which it would be if you took it out of an RRSP). You can also replace the money you took out. Let's look at this example.
Let's say in 2009 I put in the allowable $5,000 and then again in 2010 so now I have $10,000 in the TFSA (I'm not going to add any returns for the purpose of this example). I decide I want to go on a vacation and take the money out so I take out the whole $10,000. In 2011, I win the lottery and I can put in $15,000! That would be the $5,000 amounts I am replacing for the 2009 and 2010 tax years as well as the new contribution for 2011.
Sometimes it is more important to use the TFSA for a savings vehicle rather than contributing to a RRSP!!! It can also be used as a tool for income splitting. If you want further information or clarification please feel free to comment or contact me @ kjankowski@tewealth.
I know I certainly do not so as soon as the clock struck midnight on December 31 I sent a message to my administrators asking them to transfer $5,000 from my non-registered accounts to my Tax-Free Savings Account (TFSA).
I really do not like the name the government gave to this tax-free haven as it's title often misrepresents the benefits. It's not a savings account, per se. It can be an investment account so that you can put any stocks, bonds or mutual funds into your TFSA and any interest income, dividends and capital gains you receive are not subject to tax! Calling it a 'savings account' has led clients to believe that you have to put the funds in a 'savings account' at the bank earning today's low rate of interest rather than use a more effective investment strategy and they tend to dismiss this strategy all together. What a missed opportunity!!!
What's even better is that if you have come into a windfall in 2011 and have not been contributing over the past 3 years you can catch up and put in $15,000 all at once! The rules are that you can contribute $5,000 per year from 2009. Unlike a RRSP you will not receive a tax deduction for your contribution but when you take the money out it isn't taxable income either (which it would be if you took it out of an RRSP). You can also replace the money you took out. Let's look at this example.
Let's say in 2009 I put in the allowable $5,000 and then again in 2010 so now I have $10,000 in the TFSA (I'm not going to add any returns for the purpose of this example). I decide I want to go on a vacation and take the money out so I take out the whole $10,000. In 2011, I win the lottery and I can put in $15,000! That would be the $5,000 amounts I am replacing for the 2009 and 2010 tax years as well as the new contribution for 2011.
Sometimes it is more important to use the TFSA for a savings vehicle rather than contributing to a RRSP!!! It can also be used as a tool for income splitting. If you want further information or clarification please feel free to comment or contact me @ kjankowski@tewealth.
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