My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, August 20, 2018

The Best of The Blunt Bean Counter - Is Your Estate Planning Horizontally Challenged?

This summer I am re-posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am posting a February, 2017 blog on whether your estate planning is horizontally challenged. Essentially this means; have you considered your children's relationships and rivalries in your will, so that your will can be easily administered without creating dissension or in-fighting amongst your children.

Is Your Estate Planning Horizontally Challenged?

In November 2011, I wrote a blog titled “How your Family Dynamic can affect your Estate Planning”. In that post, I proposed that you must consider vertical and horizontal issues in respect of your estate planning.

Vertical issues are decisions made by parents that will affect their children and potentially the way in which their children view them after death. These decisions would include choices made in your will such as who is the executor and how you distribute your assets and issues outside your will, such as which child you will pass the reins to run the family business.

Horizontal issues relate to the interrelationship of your children, such as sibling rivalries and past jealousies and perceived parental favouritism. These issues may be exacerbated by vertical decisions made by parents and thus I suggested any parent who does not consider these horizontal relationships runs the risk of creating a divisive wedge amongst their children.

Since I wrote this post, I have seen these horizontal issues play out a couple of times where parents estate planning included unequal distributions in their wills. I won’t provide specifics, but you generally see unequal distributions for three main reasons:

1. One child essentially becomes the caregiver of a parent (or parents) while the other children are "no shows" and the parent in essence “rewards” that child.

2. One child’s financial position is weaker than the other children, so the parent assists them with a greater inheritance and/or help while alive.

3. One child was always the black sheep.

Everyone is entitled to deal with their estate as they wish and there is no law that says you have to leave your estate equally to all your children or even leave any of it to them, as opposed to say charity.

However, if you are like most people and you wish to keep your wealth and assets within the family, you need to understand that you can’t always have your cake and eat it too. By this I mean where your children have a good relationship, you cannot expect that you will not put a strain on this relationship if you provide unequal distributions. In most cases, human nature causes jealousy or envy of some kind and can ruin a good sibling relationship.

In cases where your children do not have a good relationship, some parents, as they are in failing health, request that the children try and improve their relationship; yet the parent adds to the strained relationship by favouring one child over the other in their will (not that equalizing is any guarantee you will change your children's relationship).

For most people, this is not an issue. But, if you have unequal distributions in your will or estate planning, you may have to decide what your greatest priority is: providing one child with more assets or keeping harmony among your children. Accomplishing both may not be possible. Regardless, there is no assurance that if you bite the bullet and equalize your estate, that some obscure or trivial issue will not cause friction amongst your children.

There is no right or wrong answer here and you may say, children be dammed, I am distributing my assets as I see fit. I am just pointing out that you must be realistic and if your prime objective is keeping peace among your children, consider both vertical and horizontal issues.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Monday, August 13, 2018

The Best of The Blunt Bean Counter - Is a Corporate Executor the Right Choice?

This summer I am re-posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am posting an April, 2011 blog on why you may wish to use a corporate executor, where you do not have a family member or friend capable of the task or you feel conflicts could arise among your family if one or two children are selected as executors.

You Have Been Named an Executor Series

The first blog in my executor series, discussed the concerns the Globe and Mail had in respect of the estate tax system and in particular, some of the issues surrounding the Paul Penna estate. The problems associated with Mr. Penna’s estate, highlight the importance of considering a corporate executor in certain circumstances.

In my second blog, I discussed the duties and responsibilities of an executor. These responsibilities can often overwhelm the appointed executor(s); which again leads back to today’s guest blog on whether a corporate executor is the best choice for estates that will have unsophisticated executors?

Today, in my final installment of the series I have a guest blog by Heni Ashley. Heni is a lawyer with over 20 years experience in the estate and trust industry, who brings a unique perspective to this issue. I thank Heni for her contribution.

Is a Corporate Executor the Right Choice? (By Heni Ashley)

I have read Mark’s two prior blogs and the Penna estate article with great interest. The Penna estate, in my opinion, was just the type of situation where a corporate executor should have been considered.

What exactly is a corporate executor?  Corporate executor services in Canada are available through incorporated trust companies, which are typically subsidiaries of our national banks.

Had Mr. Penna appointed a corporate executor, his bequests would have been carried out and the estate’s finances would have been tracked diligently and accurately.

In my opinion, a corporate executor provides an estate with the following:

1)    Professionalism, knowledge, expertise.  Knowledge in the area of estate, trust and tax law is invaluable, as is expertise in asset gathering and valuation, property management, investing and accounting.

2)    Impartiality.  A corporate executor can manage conflicting interests (i.e. second marriages), difficult personalities and bring an objective, unemotional approach to the estate administration.

3)    Availability.  The corporate executor is always there.  There is no need to worry about an out of town executor, or an executor dying or becoming incapacitated or physically unable to carry out the task. 

4)     Ease of administration.  There is no worry about unduly burdening a family member, friend or associate as the job of an executor can be difficult (depending on the size of the estate and the personalities of the beneficiaries) and time-consuming (depending on the nature of the assets).

5)    Continuity/permanence. A corporate executor can provide the continuity needed for certain family situations such as an ill or incapacitated spouse or minor or disabled children where there is a need for long term trusts and financial care.

6)    Cost efficiency.  The personal executor can charge the same fee as a corporate executor.  Often a fee agreement can be negotiated with a corporate executor at the time that the will is drawn.  Also, a corporate executor often eliminates the need to hire additional outside experts, which results in a cost savings to the estate.

Notwithstanding the above, had the deceased in the Penna case given thought to using a corporate executor, there are a few reasons why he might have decided against it:

1)       Impartiality (which can sometimes be viewed as indifference to family):  Some people are concerned that a corporate executor will be indifferent to the needs of the beneficiaries. This objection, however, can be overcome by jointly appointing a corporate executor together with a personal executor who can shed some light on the personal circumstances of a deceased’s family.  The two executors can then act as a check and balance against each other.  Another way to deal with this is to leave a detailed memo together with the will, explaining to all executors the reasons for certain bequests and discretionary powers (i.e. to help a child get established in business, to see a particular charity get off the ground, to provide the best of care for a sick spouse, etc.)

2)      Knowledge: A testator (the person making a will) may have a knowledgeable professional relative, friend or colleague who is willing to act as an executor (although Mr. Penna thought he had such a person).

3)      Cost: While a personal executor can take the same fee as a corporate executor, in many cases he/she will not take the maximum fee because he/she feels it is excessive (the fee can be as high as 2.5% of the assets coming in and 2.5% of the assets going out as well as a fee on income earned by the estate and a care & management fee).

I would suggest it does not make sense to engage a corporate executor in the following circumstances:

1.     Where the estate is very small,
2.     Where there are only a few well defined beneficiaries,
3.     Where the gifts are all outright (i.e. no long term trusts to be administered), and
4.     Where the assets are all very straightforward (e.g. one or two bank accounts or brokerage accounts, no real estate).

In summary, each situation is as unique as the individual parties involved.  Some beneficiaries are never happy no matter what, whether it is with their bequest, with someone else’s bequest, with the choice of executor, the manner in which the estate is administered …  Often childhood jealousies surface to complicate matters – families can be difficult and the job of an executor is rarely an easy one!

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Monday, July 30, 2018

The Best of The Blunt Bean Counter - Lifestyle Expansion - The Plague of Boomers, Millennials and Everyone in Between

This summer I am re-posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am posting an April, 2017 blog on Lifestyle Expansion. This blog post discussed how so many of us continually expand our lifestyle to match our work raises, increased consulting income or income allocations. Although this post is not long in the tooth, I re-posted it because I think it is very relevant when you contemplate your yearly spending habits and plans for retirement.

Lifestyle Expansion - The Plague of Boomers, Millennials and Everyone in Between

Over the years, on more than one occasion, I have had to read the riot act to clients who make high six-figure incomes about their spending habits. The discussion is almost always in context of their retirement planning and how if they continue their current spending, they will either not have enough to retire on, or will have to sell their house and/or cottage very early in their retirement to fund their future needs.

This issue is not isolated to high-net worth people and those near retirement; it is the same problem for someone who makes $80-$120,000 as for someone who makes $600,000 and the same issue for millennials (although more in context of saving for a home than retirement). If you continually expand your lifestyle to fit your increasing income or current income level, the reality of your retirement or your future living situation, may be far different than you envision it. That being said, obviously if you make $600,000, you have more leeway to catch-up, even if it seems incomprehensible you even have such an issue in the first place. 

The term “lifestyle creep” is often used to reflect this worrisome spending issue. Investorpedia defines lifestyle creep as “a situation where people's lifestyle or standard of living improves as their discretionary income rises either through an increase in income or decrease in costs. As lifestyle creep occurs, and more money is spent on lifestyle, former luxuries are now considered necessities”.

If you are in your late 40's or early 50's, the insidious part of lifestyle creep is that your current earnings support whatever you wish to do and thus you carry on without a care in the world. It is only when I force someone to face the reality that once the gravy train (salary or business) stops, their income requirements are so massive, that their current and retirement assets will be insufficient to fund their needs (even if they significantly reduce their costs in retirement) that I get their attention. 

From a psychological aspect, some people find it very important to maintain a certain image or lifestyle and/or keep up with the Joneses. However, the Joneses may have way more money than you and it is only your current income that allows you to keep up. The reality is you may be swept aside by the Joneses in retirement, as they may only hang out with those "friends" who can spend with them and who have the capital to continue spending at excessive levels.

For some people, all they need is that sobering meeting and they immediately start getting their act in gear. For others, their spending habits are so entrenched and/or so financed; they need to engage a financial planner or money coach. Most discouragingly, some people just pull an Ostrich and put their head in the sand.

Lifestyle creep is not only an “older person” issue. I observe many millennial's spending their entire salaries on bottle service at restaurants, expensive vacations, cars and costly bachelor and bachelorette parties to exotic locales for their friends.

Fixes and Suggestions


So if you have that sobering moment and come to the realization your lifestyle has expanded to your salary or business income, what can you do? Here are a couple basic solutions:

Spending Review


The first step to tackle this issue is to undertake a detailed review of your spending. Track you’re spending for 2-3 months and add on your large one-time expenses not included in the tracking period. Then analyze the results of your spending review and note your excesses. If you are a reader of this blog, you know I am not frugal and have written many times that in my opinion, it is important to enjoy your life and “knock off” some of your Bucket List items while you can. However, there is a huge difference between enjoying your life and spending excessively. All of us can easily cut-back, especially those of us who spend like there is no tomorrow. The obvious areas are always: restaurants, travel, clothes, cars, nanny’s and cleaning ladies (not saying don’t hire them, you may just not need them as often as you currently pay them for), dog walkers etc. 

Auto Savings


Once you undertake your review and decide to reduce your expenses, force yourself to do so by having automatic transfers from your bank account into your retirement or investment accounts, or if you are in debt, increase your monthly repayments (I am astonished at how many people who make $500,000 to $1,000,000 are in debt).

Work Longer


As noted in my recent blog post The Victory Lap, working longer or part-time in retirement is not only healthier and keeps you physically and mentally sharp, but it is a way to save you from having to encroach on your retirement capital. For some of us, it may be the only way to fund our retirements.

Financial Planner or Money Coach


As mentioned above, engaging a blunt accountant, financial planner or money coach is a vital step for many “free spenders”, since it provides discipline and structure in getting their finances in better shape.

Other Articles


Here are a few links to articles on this topic for high earners close to retirement, entrepreneurs or millennial's.


Millennials - Are You Showing the Signs of Lifestyle Creep?

Fighting Lifestyle Creep and Saving Money as an Entrepreneur

Lifestyle creep is sinister, as you often do not realize it is an issue until it has already become part of your financial fabric. If you are starting to creep, stop it now. If you are already caught in the spending web, take the steps noted above to get your spending under control.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Tuesday, July 24, 2018

How Business Owners Can Plan for Retirement - Webinar August 1st

If you are a small business owner, you may wish to join BDO Canada LLP for a webinar on August 1st at 12pm EST, on the special issues small business owners face when planning for retirement.

Jeff Noble, Director & GTA Practice Leader of BDO's Business Transition & Wealth Continuity team, will discuss issues such as business succession and enhancing the value of your business, in preparation for the sale and/or transition of your business as part of your retirement plan.

Tom Mathies, a Senior advisor with BDO's Wealth Advisory Services team will discuss some of the key issues you need to consider in preparing a financial plan and planning for your retirement.

Finally, yours truly will discuss some practical family and business issues related to retirement. 

If you wish to sign up for the webinar, here is the link
 
The webinar is premised on the "From Plan to Retirement: How Business Owners Manage Their Wealth, Lives and Legacies" report released by BDO late last year. You can download that report here.



Monday, July 23, 2018

The Best of The Blunt Bean Counter - Memory Overload, Alzheimer’s and Death in the Digital World

This summer I am re-posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am posting a May, 2012 blog on Memory Overload, Alzheimer’s and Death in the Digital World. This blog post considered how to keep track of all the passwords we have and whether a digital solution was the best alternative. Not surprisingly, much of this post was dated, so I have updated several sections. Despite many new alternatives, we still have the same issue today as back in 2012, that being; how the heck to keep track of all our passwords.

Memory Overload, Alzheimer’s and Death in the Digital World

About a year and a half ago, my wife who is an avid reader, kept telling me about a book she was reading titled “Still Alice” by Lisa Genova (which is now a movie). Eventually I became so intrigued, I read the book. This bestselling novel tracks the tragic decline of a brilliant 50-year-old woman suffering from the early onset of Alzheimer’s, the impact on her family and the decisions she makes, once she accepts the reality of what is happening to her. If you have not read the book I suggest you read it. It is both disturbing and thought provoking.

After reading the book, I recommended it to a service provider of mine. This person read the book and one day we discussed it. Our discussion veered off onto how hard it is for a person with full capacity to remember all the electronic passwords we are required to set up in this day and age (assuming you do not use the same password for all your financial and social sites; which is frowned upon by most computer security experts). As our discussion progressed, we considered the nightmare it would be to deal with all the electronic banking, billing, etc. if god-forbid we developed Alzheimer’s as Alice did in the book.

The discussion took an unexpectedly darker turn, when the person told me that they had a huge issue recently when a family member had passed away un-expectedly at a fairly young age, and since that person was computer literate, much of their world was digital and no one had a clue as to the electronic passwords of the family member.

The above discussion revealed three different scenarios that can arise in this electronic and digital era:

(1) You have full capacity but just cannot remember all your passwords;
(2) Your capacity begins to diminish whether through Alzheimer’s or just old age;
(3) You or a family member passes away, and you or a family member as executors must deal with electronic and digital records for which you have no access and whose existence you may not even be aware of.

Personally, I have completed an information checklist so my wife is aware of the assets we have. I have also made sure she is aware of our more important financial passwords. As someone who is by no means a computer whiz, I surfed the web to see what others were recommending or suggesting in regards to these various digital issues, and came across a Forbes.com article titled Six Ways To Store Securely The Keys To Your Online Financial Life by Deborah L. Jacobs, who is a lawyer and journalist.

Some of Ms. Jacobs’s suggestions to secure your financial online life are as follows:

Use an electronic password manager


Ms. Jacobs noted there are a number of services that allow you to enter all your passwords into a single database and lock them up with a master electronic key. You (or your agent) only need to remember one password to access the list. Update: Here are a couple 2018 links for the best managers of 2018 from PC Mag.com and CNET.

Ms. Jacobs also suggests you can back up onto a USB flash drive, which becomes a mini encrypted vault with a password of its own. She notes the drawback is you must find someplace secure to store it.

Using either a USB flash drive or password service, addresses situation #1, where you have full mental capacity, but are just suffering from password overload.

Rely on a digital gatekeeper


Ms. Jacobs’s notes there are several new services, aimed at people who are doing estate planning, that charge a monthly or yearly fee to store the digital data that you enter, and release it according to your instructions.

In my initial post I had an article that referenced three new firms that had come onto the scene that help individuals protect and transfer their digital assets. All the initial links no longer work, which reflect either the lack of adoption or competition.

Here is a 2018 article on the options for a digital asset management software by Softwareadvice.com  (scroll down the page for the article).

Old School Solutions


Finally, Ms. Jacobs suggests two “old school” solutions: (1). Enter vital information in a loose-leaf or notebook and (2) use an old-fashioned lock box. 

I would suggest that both these solutions are probably used in some manner by many people, but are not exactly state of the art and have inherent security issues.

As I stated earlier, I am far from a computer security whiz. The intention of this blog post is to bring attention to the various electronic and digital issues noted above, and to make sure if you have not already addressed these issues in some manner, you consider doing such.

If you are currently using an electronic password manager and/or a digital gatekeeper that you are satisfied with, please post the names of these managers or gatekeepers and what you like and don't like about them in the comments section. Thanks.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.

Monday, July 16, 2018

The Best of The Blunt Bean Counter - Legacy Stocks - To Sell or Not Sell? That is the Question?

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am re-posting a March, 2017 blog on whether to sell Legacy stock positions. People are often frozen into "in-action" because of the tax consequences of selling a legacy position, especially where you have a large unrealized capital gain.

Legacy Stocks - To Sell or Not Sell? That is the Question?


Some people, typically seniors/baby boomers have owned stocks for decades, either through direct purchase or an inheritance of some kind (stocks transferred from a deceased spouse pursuant to their will generally have an adjusted cost base equal to what the deceased spouse originally paid for the shares; shares inherited from a parent or grandparent will generally have a cost base equal to the fair market value on the day of inheritance). These stocks are commonly known as Legacy Stocks; more often than not, they will include shares of Bell Canada, the Canadian bank(s) and/or insurance companies.

In early 2017,  Rob Carrick, The Globe and Mail’s excellent personal finance columnist  mentioned to me that several of his readers had asked him about selling their legacy stocks (or as more typically is the case, not selling their legacy stocks). I told him I thought the issue would make a good blog topic and asked him if he was okay with me using his idea to write a post. He gave me his blessing, so today I am writing about the issues and considerations for those of you holding legacy stocks and similar type securities.

The Common Quandary


The issue with selling legacy stocks is that they:

1. Typically have huge unrealized capital gains and thus the sale of these stocks creates a large tax bill

2. The realization of the capital gain can result in a clawback of Old Age Security ("OAS"), which seniors are loathe to ever repay

I know some readers, especially my millennial readers are thinking to themselves “Is Mark really going to write about minimizing the large capital gains of baby boomers that have already benefited from the huge increases in real estate? Cry me a river that they owe some tax.” The answer is yes, since a tax issue is a tax issue and this blog, although meant for everyone, is targeted to high-net-worth individuals and owners of private corporations.

There Is No One Size Fits All Answer


If you have a legacy stock(s) you are considering selling, there is not a standard “one size fits all” answer. There are various investment and income tax considerations. I discuss these issues and considerations below.

Capital Gains Rates


The marginal tax rate for capital gains in Ontario for income in the $45-$75k range is approximately 12-15%. This rate jumps to 19-22% or so between $90-$140k in taxable income and hits 26.8% once your taxable income exceeds $220,000.

Capital gains rates are the lowest tax rates you get in Canada. So from my perspective, the taxes you would pay from the sale of a legacy stock should not be the determinant in deciding to sell. The key factor (subject to the discussion below) should always be what the best investment decision is. Watching a stock drop 15%, to save 20% in capital gains tax, makes absolutely no sense, when viewed in isolation.

There has been concern the last few years that the Federal government may change the taxable inclusion amount of a capital gain from 1/2 to 2/3 or even 3/4. However, as this is only conjecture, if you were to sell for this reason only, you would be accelerating your tax payable.

Old Age Security Clawback


As noted above, the capital gains tax tail should not wag the tax dog. However, there is one issue that complicates the matter for seniors and that is the Old Age Security Clawback.

As evidenced by many accountants’ scars and wounds, never cause even the sweetest senior to have an OAS claw back, because all hell breaks loose :). I am only half-joking; seniors really resent having their OAS clawed back. I assume it is because they feel they have an entitlement to this money and the government does not have the right to claim all or some portion back (even though, they did not directly fund this program).

Seniors must pay back all or a portion of their OAS as well as any net federal supplements if their annual income exceeds a certain amount. For 2017, if your net income before adjustments is greater than $74,789 ($73,756 for 2016) then you will have to repay 15% of the excess over this amount, to a maximum of the total amount of OAS received. The maximum repayment is hit around $119,000.

So if you have a capital gain on a legacy stock of $90,000 ($45k taxable) and you are right at the $74,789 OAS limit before the capital gain, the tax cost of the capital gain would be around $15,000 or 17% of the $90,000 gain. However, when you add the OAS clawback that would be applicable, the combined tax and OAS clawback could approach $22,000 or 25% or so. That is why you cannot look at the gain in isolation.

If you do not have an investment reason to sell your stock, you may want to consider selling the stock over a few years to minimize the tax and OAS clawback, assuming you wish to keep the stock each year.

Holding Company


A “sexier” alternative, especially for seniors is to transfer your stocks to a holding company. You should be able to do this on a tax-free basis under Section 85 of the Income Tax Act. The benefit to doing this is any dividends earned and the eventual capital gain are taxed in the holding company and thus, do not affect your OAS clawback. In addition, if you have any potential U.S. estate tax exposure (see this prior blog post on estate tax), the U.S. stocks in your holding company will not be subject to U.S. estate tax if there is estate tax in place at the time of your passing (estate tax is a U.S. political issue that keeps changing depending upon the party in charge). So while you do not save any actual income tax, you can save your OAS from being clawed back and possibly gain some U.S. estate protection.

The downside to this strategy is the cost to transfer the stocks (legal and accounting) and ongoing accounting costs, which can be high for a holding company and thus, potentially a significant part of the OAS clawback savings is now paid to your accountant instead of the government, so you have to weigh the savings versus the costs.

Capital Losses


If you plan on triggering capital gains on legacy stocks, you should review if you have any capital losses you can apply against these gains. The CRA notes your capital loss carryforward balance on your notice of assessment and if you have a My CRA account, you can get this information online. It should be noted, the application of the losses only reduce the capital gains tax, not the OAS clawback.

Charitable Donation


Where you donate public securities to a registered charity, the capital gains inclusion rate is set to zero. Thus, there would be no capital gain to report on the donation of a legacy stock (have your accountant run the numbers, but this should minimize or eliminate the clawback) and you receive a donation credit. This is reported on Form T1170 . This strategy is effective if you make large donations every year or were planning to make a substantial donation and helps the charity since you have more funds to donate than with an after-tax donation.

The decision to sell a legacy stock is not a simple one. The overriding decision should still be an investment decision; however, where you are indifferent to selling, you need to consider the various issues and options I have noted above. Before undertaking any legacy stock selling, you should consult your investment advisor and possibly your accountant.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.

Monday, July 9, 2018

The Best of The Blunt Bean Counter - Where are Your Assets?

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am re-posting a February, 2011 post on where are your assets? It was probably my shortest blog post ever, but the message is succinct. Get your ass-ests in gear. Make sure you have a list of everything you own so that you do not leave your spouse and family a financial mess.

Where are Your Assets?


If you died tomorrow, would your family and advisors know where your assets are and what assets you owned?

I would suggest the answer in 50% or more cases would be a resounding no.

If you have answered no, take this one step further; consider the havoc you will cause your family and executors. They will be distressed having to deal with your passing, now you are compounding their stress by forcing them to deal with an estate when they have no clue what assets you own, what debts you have outstanding or where the assets are held. Most likely they will not have a duplicate safety deposit key or even know where your safety deposit box(es) is/are.

Whether you are just negligent or lazy, your actions are selfish and you should immediately take steps to rectify the situation.

All this can be averted very simply. Take a weekend and complete a personal information checklist (there are several on the Internet) and then put a reminder in your phone or Outlook calendar to review this checklist each year to ensure there are no changes.

Once completed, consider providing a copy of the checklist to your spouse, your accountant, lawyer or trusted third party. In any event, at minimum, put a final copy in your safety deposit box and ensure either your spouse of another person is aware of the location of the safety deposit box and the key.

I have on many occasions seen the aftermath of situations where a spouse has not provided a list of assets. It is not pretty and I am sure if you take a moment to ponder this, you do not want to leave your family in a similar situation. So, get to it and make a list! 

Bloggers Note: A couple years after writing the original post, I was told of a story of a well-to-do couple on vacation that got caught up in a natural disaster area. They ended up safe; but before they felt that security, they were trying frantically trying to call and inform their family what assets they had and where they were. I think this sums the theme of my post, just be prepared and if you get caught up in a natural disaster, worry about saving yourself, not telling your family where your assets are :)

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.