Registered Education Savings Plan (RESP)

Registered Education Savings Plan (RESP)

My kids are 18 and 20, does setting up a new Registered Education Savings Plan (RESP) still make sense? Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® A new client asked if it still made sense to set up a new RESP for his kids, who were aged 18 and 20. His ex-spouse already had an RESP for the children, but he wanted to know if he could still set up a new one. This is a good question because RESP rules are confusing. The last age children can receive the grants is the year they turn 17, so in his situation, it didn’t make sense to open a new plan.   Also, only the subscriber of an RESP can claim funds back if they are not used for education. Since he is not the subscriber, he should not contribute to the existing RESP Special rules for beneficiaries who are 16 and 17. It should be noted that to get the grants...
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Who should you name as Executor?

Who should you name as Executor?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® A common question I received as an advisor is whom should we name as executor in our Wills? The true answer is that it depends on your situation. It usually ends up based on how complicated your estate may be, the projected value and who in your immediate family may be able to do the job. The following excerpt from the Book - Preserving Wealth, provides a starting point for this discussion. “Wow, maybe I’ve been too tough on the government. But who would you suggest I name as executor? I don’t have a wife anymore, and my kids are just in their early twenties and not particularly knowledgeable about finances. I guess Mom knows a lot about money, but she’s getting older, and she probably wouldn’t want the job.” Uncle Wayne replied that there are several ways to go, but that the most common choices for executor include: spousechildren, if capablefriend...
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Questions to Ask When Interviewing a Financial Planner

Questions to Ask When Interviewing a Financial Planner

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Deciding on which financial planner to hire is a particularly important decision for families to make. The following are key questions that FP Canada has designed to help in the selection process. How to Interview a Financial Planner Financial planners can help you plan for retirement, find the best way to finance a new home, save for your child's education or simply help put your finances in order. Whatever your needs, working with a professional financial planner is a crucial step in helping you meet short-term and long- term goals that will help ensure your financial well-being. Finding the right planner is extremely important because your choice will almost certainly affect the security of your financial future. The following questions will help you interview and evaluate financial planners to find a competent, qualified professional with whom you feel comfortable and whose business style suits your needs. Don't be afraid to ask these...
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Why Probate may be a good thing!

Why Probate may be a good thing!

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Much has been written about the various strategies to avoid probate fees or the estate administration tax.  The reason is simple, in Ontario, probate fees are 1.5% of the estate over $50,000.  This fee is applied to assets that are transferred through the will. However, probate may be valid for some uses, and with all strategies you must watch for unintended results. The following excerpt from the Book - Preserving Wealth, that reviews this: PROBATE, TRUSTS, AND ESTATE TAX MINIMIZING STRATEGIES “This is great coffee, Sandra,” said Uncle Wayne. “I wish you could talk your Aunt Jen into buying the good stuff. She always gets coffee on sale, and it’s so weak that I end up needing a whole pot just to get my heart started most mornings. Oh well, let’s get back to work. “I believe we were about to go over information about trusts and some methods you could use...
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COVID-19 and the Essential Family Conversations You Should be Having

COVID-19 and the Essential Family Conversations You Should be Having

  COVID-19 has brought family planning and care issues to the forefront for many families as concerns for their loved ones and their economic well being have become top of mind.  Everyone’s life has been impacted, regardless of age. As a result, families realize they should focus more on these concerns, but are often unsure where to start. Based on my experience of helping many families over the years, I have found there are four essential conversations that families should have concerning their financial and estate plans.  These are: The Estate Documents Conversation, The Eldercare Conversation, The Legacy Conversation, and The Next Gen Financial Education Conversation. The Estate Documents Conversation The estate documents conversation is a conversation you should have with your parents, children, executors, and powers of attorney to review and discuss the following key issues: With your parents: Find out who their powers of attorney and executors are. Obtain copies of their wills and powers of attorney (or the location of the documents). Meet your parents’ financial advisor(s). Obtain the listing of...
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If you are within 5 years of retirement, do this now!

If you are within 5 years of retirement, do this now!

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Track your expenses!!  If you are thinking about retiring within the next 5 years, you need to determine how much you spend in a year. Your day to day living expenses is the starting point to determine if you are on-track, or even in the ballpark to be able to retire and live the lifestyle that you want. You can’t even begin to work out if you are on-track without your expenses, and those need to be somewhat close to accurate. Your spending is the starting point to determine if you can create a strategy to address the common concerns of soon to be retirees: Making sure they can do the things they want in retirement,  Maintaining consistent income for life, Paying less tax, Providing financial security for loved ones, and Transferring family wealth successfully to the next generation. 2020 was a great year to use as a baseline to determine your day-to-day   living expenses,...
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What are the different investment classes?

What are the different investment classes?

  Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® Before you invest your money, you should understand what the actual investment is. The following passage describes the three basic investment classes. Alice had listened politely but was clearly get­ting impatient. “So, Uncle Wayne, you know our situations. What should we invest in?” “For starters,” replied Uncle Wayne, “let’s look at the three investment classes— cash, bonds, and equities/stocks—and review what you’d be getting into with each.” “I’d like to take a stab at this,” declared Mark. “In the first two categories, cash and bonds, you’re basically lending money to another party, but with stocks, you’re buying shares, or owner­ship, in a company. Over the long term, stocks have outperformed the other types of invest­ments.” “Details!” demanded Sally. “More details, please.” “Sure. In the category of cash, you’ve got sav­ings and chequing accounts, and Treasury Bills (T-Bills). “T-Bills are sold every Tuesday by the Government of Canada, for terms from thirty days...
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What is the process once you Hire a Financial Advisor?

What is the process once you Hire a Financial Advisor?

  Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® I was speaking to someone on the phone a couple of weeks ago, and the question they asked was “what is the process after we hire a financial advisor?”. This is a very important question to have answered, and the response from the book is as follows. What is the process once you hire a Financial Advisor? “Normally the ongoing process they would follow would be to find out what your family’s dreams, hopes, goals, and desires are benchmark your current financial reality; co-create the required strategies and plan that will enable you and your family to achieve your dreams, hopes, and desires in the time frame you have selected; execute your specific strategy in the following five key areas       a. retirement and cash-flow strategies,       b. investment management,       c. tax planning,       d. insurance and risk management, and       e. estate planning; 5.  use a detailed...
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How do Financial Advisors get Paid?

How do Financial Advisors get Paid?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® It is important to understand how a financial advisor is compensated if you hire one. The following is a summary from FP Canada. How will I Pay for Your Services? Your planner should disclose in writing how s/he will be paid for the services they provide. Understand how your potential planner will be compensated and choose whatever model works best for you. Planners can be paid in several ways:   From the cost of the product: Some planners receive their compensation directly from the product manufacturer when you purchase a product through the planner. For example, their compensation is part of the management fee of the fund. In this case no money is exchanged between the client and the planner. Rather, the cost to the client is embedded in the cost of the mutual fund.   Percentage of assets under management: Some planners will charge a fee as a...
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What is the Next Gen Education Conversation?

What is the Next Gen Education Conversation?

  Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® It has been my experience that personal finance has not been taught well in high school or even University. I know that our kids had no such education at school. Simple ideas such as paying off your credit cards monthly, compounding, how taxes work, joining your company savings plans are a few of the concepts that everyone should know about. The Next Gen Education Conversation This is a conversation you may want to have with the next generation to emphasize the importance of financial education and help them to be well equipped to handle their own financial affairs as they go through life's transitions. Your financial advisor may be able to assist with this. Some key concepts and topics to review include: how to budget for post-secondary school your first job and setting a lifestyle you can afford simple budgeting and cash flow planning understanding how taxes work leasing versus buying a car understanding your employer’s...
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