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.

Monday, April 23, 2012

You put it off Long Enough- Time for your Annual Financial Check-up

Hopefully, most readers of this blog go to their doctor for an annual check-up; although unfortunately for many guys, annual seems to mean once every five to ten years. However, I digress from the topic at hand.

Another check-up many people tend to avoid like the plague is their financial check-up. Below I provide a simple checklist of financial items, that is intended to make your financial check-up relatively painless.
  1. Is your will up-to-date
  2. Do you have a second will if you have shares in a private corporation? (a second will in certain provinces may reduce probate taxes) 
  3. Does your will integrate into your income tax and estate planning, or are they in conflict?
  4. If you have re-married and have a second family, does your will address the potential complications?
  5. Are your executors still the correct people to administer your will? Have you informed them/asked them about this appointment? 
  6. Do you have an up-to-date power of attorney for health? 
  7. Do you have an up-to-date power of attorney for finances? 
  8. Where is your safety deposit key, and does anyone else know where it is? 
  9. Have you prepared an information checklist for your executor(s)/spouse?  
  10. Do you have a net worth statement? You should prepare an updated statement every December 31st for comparative purposes (so get cracking on December 31, 2011, which I assume was not done).
  11. Do you have a financial plan? If not, consider engaging an advisor to prepare one. If you have a plan, it should be updated every few years or at least reviewed for any significant life changes or changes in assumptions. 
  12. If you are over fifty, you should at minimum determine your expected yearly cash requirements in retirement and compare that with your expected income inflows.
  13. Can you accelerate the repayment of your debt? 
  14. Can you convert any non-deductible debt into deductible debt?
  15. Can you consolidate any credit card debt?
  16. If you are single or widowed, or god forbid you and your spouse died in a car crash tomorrow, do you have enough liquid assets and insurance to cover your anticipated income tax liability? 
  17. Who is/are the beneficiary(ies) of your RRSP and insurance policies? Are they the correct people (ie: not your ex-spouse).
  18. Do you own US real estate or stocks? If so, have you considered your US estate exposure if the US estate tax rates return to the higher rates of prior years? 
  19. If you are a shareholder of a private Canadian company, have you undertaken planning to access the $750,000 Qualifying Small Business Corporation ("QSBC") exemption?
  20. If you have a corporation, have you considered a family trust to income split and possibly  multiply the QSBC exemption? 
  21. If you own a corporation, do you have a succession plan?
  22. Do you have life insurance? Is it sufficient given changes in your life such as the birth of a child or a recent marriage?
  23. Is your level of insurance too high given your life situation (ie: children are now in the work force)? 
  24. Do you have disability insurance at work or personally? 
  25. Do you have critical illness insurance or have you considered such?
  26. If you have excess investable assets, have you considered a Universal insurance policy? 
  27. How many different investment accounts do you have? Is it time to consolidate your accounts and/or investment advisors if you have more than one? 
  28. If you have children do you have an RESP? 
  29. Have you discussed with your high-school aged children your expectations of them in helping fund their education?
  30. Have you opened a TFSA?
  31. Have you considered how your citizenship may affect your income tax and pension situation? For example, if you are a US citizen, have you been filing US 1040 tax returns? For citizens of other countries who will receive a pension, have you researched the income tax treaty implications of receiving such pensions in Canada?
  32. Where you have an investment advisor, do you have any idea of your investment returns for the last year, five years or ten years? If not, how do you evaluate their performance?
  33. Does your current portfolio reflect your appropriate risk profile?
  34. If you or your spouse has capital losses, have you considered any planning to ensure they are utilized?
  35. Would the purchase of a flow-through share be beneficial from a tax perspective, assuming it fits your investment criteria?
  36. If you have charitable intentions, do you have a plan in place for achieving those goals?
  37. Have you set-up a filing system to ensure you capture all your income tax receipts?
  38. If you can deduct employment expenses, have you created an Excel file to track expenses?
  39. Do you have an emergency cash fund in case of sickness or job loss?
  40. Do you have a family budget?
The above list, although long in length, is far from exhaustive, but should provide a nice kick-start to your financial check-up. More importantly, unlike the doctor, this check-up does not require gloves.

If you want to review a blog post with less detail, but a broader perspective, check out this post by the Million Dollar Journey on giving Yourself a Financial Checkup

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.