Common Estate and Tax Planning Issues

Over the years, I have reviewed many individuals’ financial affairs. Most people have their affairs somewhat in order, but there are typically still some issues to be considered or holes to be filled. Today, I list some of the most common issues and gaps.

Estate Issues

The most common estate planning issues I have observed relate to wills, powers of attorney, estate documentation and insurance. I discuss these below.

 

Wills

Wills always seem to have multiple issues and errors of omission when I review them. These five are the most common:

1. No Secondary Will – Depending upon your province of residence, a secondary will can be used to reduce the probate taxes due upon your death. This would most typically apply to shares you own in private companies and other personal items. It is my understanding that Ontario and British Columbia are the two main provinces where secondary wills are used, so check-in with your advisor if you live in a province other than Ontario or B.C.

2. Old or Dead Executors - As many people do not update their wills on a regular basis, I have often found their executors have passed away or they are very old (if your children are not your executors). You may want to review your executor selection and ensure you have at least one “youngish” executor.

3. All the Children are Executors – Keeping with the executor theme, many people have all their children as executors. I suggest that if you can finesse this with your children, in some cases it is better to only have one or two of your financial savvy children as executors, to avoid the estate being bogged down. This is not always practical given family dynamics, but is more efficient and can often reduce sibling friction.

4. Individual Bequests are Missing – Estate lawyer Charles Ticker notes in his book “Bobby Gets Bubkes: Navigating the Sibling Estate Fight that one of the biggest issues children have post-mortem, is where a parent had promised a child a certain personal item, be it jewelry, art, purse etc. and it is not reflected in the will. Parents, make your will consistent with your promises.

5. Blended Family Issues – Blended family issues can be so complicated, there is sometimes “paralysis by analysis” and they are just ignored. In this blog post I wrote in June 2020, I note that estate planning is complicated enough in a first marriage; second or third marriages multiply the risks and complexity. You may want to read the wills and estate planning sections of this blog post on blended families.

Powers Of Attorney

The two most common issues I come across with Powers of Attorney "(POA) are:

1. They are often not done!

2. The personal healthcare POA is out of date and does not reflect the significant health care issues that should be considered from extraordinary health measures to mental capacity (see this blog post) to assisted death.

Estate not Documented

I have seen many estates with no documentation in respect to the assets that constitute the estate and where the assets are located. I wrote about this a couple weeks ago, so I will not re-iterate. Here is the link to the blog post.

Insurance

Most people dislike paying insurance. However, parents often have family legacy assets they wish to keep in the family such as cottages, rental properties, family businesses etc. I have seen several instances where these legacy assets must be sold by the estate or to keep these assets in the family, excess taxes are paid as a work around solution. Often, life insurance, typically permanent insurance, such as Universal or Whole life would have made financial and tax sense and emotional sense (where the parent wanted a legacy asset to remain in the family).

I discuss many other uses of insurance for estate planning purposes in this blog post including the most popular, being life insurance to cover an estate tax liability on death.

Income Tax Issues

Capital Dividend Account

The capital dividend account (“CDA”) is a cumulative tax account that tracks certain amounts (most commonly the non-taxable portion of capital gains) that are not taxable to a Canadian Private Corporation and may be distributed tax-free to the company’s shareholders. See this detailed blog post I wrote on the subject.

Over the years, I have often seen this account not tracked or overlooked. A brief discussion of your corporation’s CDA balance should be part of your annual discussion with your accountant to ensure that you are not leaving any tax-free money on the table.

Charitable Donation Tax Efficiency

I have written several times (the last time being this blog) that many people do not maximize the tax benefits of their donations. If you plan to make a charitable donation and you own marketable securities with unrealized capital gains, it is far more tax-efficient to donate the securities in lieu of cash. This is because the capital gain on the security is not subject to tax when donated. For example, if you own shares of Bell Canada with a cost of $1,000 and a fair market value of $5,000, you would have to pay capital gains tax on the $4,000 capital gain when sold. However, if you donate the shares, the capital gain is deemed to be nil and you still get the donation tax credit.

Where you have a corporation and own marketable securities, it is even more tax-efficient to make a corporate donation, as the capital gain is eliminated and the capital gain gets added to the CDA account discussed above.

Unfunded TFSA

I find it very surprising how many people still have unfunded or partially funded Tax-Free Savings Accounts (“TFSAs”). These accounts allow you to grow your money tax-free and provide substantial flexibility in using and replenishing the account.

In the early days of TFSAs, the contribution limits were not large and people did not want the hassle of opening the account. However, as of Jan 1, 2022, the contribution limit for a TFSA is now $81,500. So, if you have not contributed, get going. If you have contributed haphazardly, check your balance with the CRA and get caught-up.

Capital Loss Utilization

I often see people pay tax on capital gains that is unnecessary, as they could have sold securities that had unrealized losses to reduce the gain and the related tax.

As 2022 has been a tough year in the markets, you may want to undertake some tax-loss selling before the end of the year. I will have my annual tax-loss selling blog in a couple weeks which is very detailed to assist in your tax-loss selling planning.

Estate Freeze

As per my blog Estate Freeze -A Tax Solution for the Succession of a Small Business undertaking an estate freeze in the right circumstances is often a great way to defer a families tax liability to the next generation. However, not everyone agrees as per this blog Are Estate Freezes the Wrong Solution for Family Business Succession?

I am a proponent of using an estate freeze where it fits a families needs. Over the last two years I have seen three estates that caused tax havoc for families that could easily have been minimized with an estate freeze several years ago.

Hopefully you and your advisors have already considered most of the issues discussed above. If not, you may wish to “clean-up” any holes in your planning and ensure the efficiency of your estate and tax planning.

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.

The Best of The Blunt Bean Counter - How to use the BDO Estate Organizer

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 January 2019 blog I wrote on how to use the BDO estate organizer. I have written numerous times over the years urging you, my readers, to get your financial affairs in order, by stress-testing your finances in case you pass away suddenly. While clearly a morbid topic, the rationale for the discussion is this: if you do not get your affairs in order and you pass away suddenly, you leave your family a financial mess at a time of emotional distress, anxiety and confusion.

The organizer can assist you in writing your financial story and ensuring your financial information and wishes are documented for your family and trustees. I would suggest COVID-19 has caused many people to consider their mortality, and the pandemic may provide you some free time to undertake this task.

___________________

How to use the BDO Estate Organizer

Not to be morbid, but since Roma Luciw of The Globe and Mail has called me “morbid Mark,” I reiterate once again: if you do not communicate and document your financial affairs for your family or executors, you at best leave your family a messy estate at a time of distress and at worst cost your estate and family thousands of dollars.

Today I will walk you through completing the Organizer and some of the important issues that arise in completing the document.

Key Tips in Using the Organizer

Family Information (p.2)

The most important item in this section is citizenship. Many Canadian don’t realize this, but parts of your estate can trigger tax consequences if you are a citizen of another country. This typically applies to U.S. citizens, since the U.S. taxes based on citizenship; while most other countries tax based on residency. Although it should be noted, Canadians who are non-residents of the U.S., can be subject to U.S. Estate tax.

Perhaps the biggest issue for U.S. citizens is home ownership. As discussed in this blog post, the U.S. has a $250,000 or $500,000 principal residence exemption, depending upon your marital and citizenship status. The fact that a tax-free home sale in Canada can result in taxes in the U.S. is often very shocking to Canadians filing U.S. tax returns.

Your U.S. citizenship can trigger many other tax consequences — such as U.S. estate tax —based on differing laws south of the border. And of course, U.S. tax compliance should begin well before estate planning makes an appearance in your life. If you are a U.S. citizen or green card holder, you should be filing U.S. tax returns. If you are not filing, you should seek U.S. tax advice.

If you are a citizen of another country, you may want to determine if citizenship in that country would have any income tax consequences upon your passing.

In addition, depending upon the politics of your home country and your children’s familiarity with that country, you may wish to sell your foreign assets as you age to simplify your estate.

Important Documents (p.5)

My Will 

If you do not have a will, it's time to have one drafted. As discussed in this blog post, 65% of Canadians do not even have a will and 12% of wills are outdated. Yes, your read that correctly: only 3 of 10 Canadians have an up-to-date will. 

If you already have a will, you should review it to determine if there have been any significant life events since you last updated it. In addition, you will want to ensure all your beneficiary designations (RRSP and TFSA, for example) agree to your will and are up to date. Many people have inadvertently left significant assets to ex-spouses by not updating their designations.

There have been substantial changes to the tax laws in the last few years, which can affect the tax treatment of trusts created by will and provisions for disabled children. If you have created trusts in your will or have a disabled child, you may want to contact your accountant or lawyer to see if these changes necessitate any change to your will.

Some provinces allow for dual wills, one for assets subject to probate and one for assets not subject to probate.

Powers of Attorney

You should have two powers of attorney (POAs), one for your financial affairs and one for your health care.

POA’s for health care have evolved over the last few years for such matters as heroic measures and even assisted-death provisions. You may want to consider updating this document depending upon your personal and religious views on these issues.

Financial Information (p.6)

As noted earlier, you will want to ensure that the beneficiary designations for pension plans and registered plans are in line with your will and your intentions. Often these designations are out of date.

After completing the Financial Information: Liabilities section of the organizer, review and ensure you have enough insurance (see discussion below) or liquid assets to pay off any of these liabilities should you pass away. You may also wish to assess whether this is a good time to have a financial or retirement plan prepared or updated.

Insurance Information (p.11)

After completing this section, sit back and consider these three things: 

1. Do you have any unnecessary insurance policies you purchased long ago and never cancelled?

2. Do you have enough insurance based on how much you spend annually, the debt you hold and significant funding expenses you still need to incur, such as tuition for your children? 

3. If you have significant funds in your corporation (especially if you will have excess funds in your corporation you will not need in retirement), have you considered purchasing a corporate-funded insurance policy?

Employment Information(p.13)

Some issues to consider is this section are:

Ensure that you detail any stock options, deferred stock units, deferred profit-sharing plans or any other of these more complex plans. Heirs often face confusion with these plans when someone passes away, so the more clarity you can provide (e.g., dates, units, tax cost basis, purchase price), the easier it will be for your family to deal with these plans.

Most employers are very good at assisting the family after the death of a loved one, but you will put your family in the best position possible by providing as many details as you can.

Income Details (p.14)

Some issues to consider in this section are: 

1. Are you taking advantage of all income splitting opportunities? You should review this with your accountant, especially given the implementation of the Tax on Split Income (TOSI) rules.

2. Consider if your investment returns are in line with your expectations and whether you even know what your returns are. See this blog post for a discussion of this topic and some useful links.

Real Estate (p.15)

Prepare a free-form schedule that should include the following at a minimum: 

1. A notation of the year you last claimed the principal residence exemption (PRE) on the sale of your home. This will allow your executor and estate to tax plan upon death or going forward in respect of future PRE claims if you have, say, a house and cottage. See this blog post for the new reporting rules on PRE claims.

2. If you elected in 1994 to crystalize $100,000 of capital gains on property you still hold, attach a copy of your 1994 form T664 to this document. The government allowed one final election to utilize your capital gains exemption before phasing out the exemption on real estate and marketable securities in 1994.

Note: Qualified small business corporations (QSBCs) continue to be eligible for the capital gains exemption — see this blog post for details.

Financial Advisors (p.16)

Ensure you have introduced your spouse or significant other to all your financial advisors. It is much easier for a surviving spouse to deal with the aftermath of a passing when they already have a level of comfort with the advisors they will have to deal with. 

Executors (p.17)

You should review your executor appointments to ensure they are the correct people for the job.

If you have not informed your executors they have been named, you should inform them. You may want to inform the executor that you have completed the organizer so that they will know it exists and where they can find it.

If you do not have someone you can name as an executor or there is possible family conflict, consider naming an institution as an executor. 

Digital Information (p.18)

If you have digital assets of value (e.g., cryptocurrency, websites), ensure you have obtained tax and legal advice and have considered them in your will. See this blog post on the topic from estate lawyer Katy Basi.

Katy also guest posted this excellent piece on a 21st century issue: how to deal with reproductive assets in your will.

Funeral Arrangements (p.19)

This is truly a morbid topic, but ensure someone is aware of any pre-paid or funeral wishes.

Final Comments

This estate organizer is one heck of a homework assignment. But it is one of the most selfless things you can do for your family, especially if you have significant assets or complex financial affairs.

The content on this blog has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The blog cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information on this blog or for any decision based on it.

Please note the blog posts are time sensitive and subject to changes in legislation.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

How to Use the BDO Estate Organizer

Two weeks ago, I posted the BDO estate organizer. In that post I emphasized the importance of writing your financial story and ensuring your financial information and wishes are documented.

Not to be morbid, but since Roma Luciw of The Globe and Mail has called me “morbid Mark,” I reiterate once again: if you do not communicate and document your financial affairs for your family or executors, you at best leave your family a messy estate at a time of distress and at worst cost your estate and family thousands of dollars.

Today I will walk you through completing the Organizer and some of the important issues that arise in completing the document.

Key Tips in Using the Organizer

Family Information (p.2)

The most important item in this section is citizenship. Many Canadian don’t realize this, but parts of your estate can trigger tax consequences if you are a citizen of another country. This typically applies to U.S. citizens, since the U.S. taxes based on citizenship; while most other countries tax based on residency.

Perhaps the biggest issue for U.S. citizens is home ownership. As discussed in this blog post, the U.S. has a $250,000 or $500,000 principal residence exemption, depending upon your marital and citizenship status. The fact that a tax-free home sale in Canada can result in taxes in the U.S. is often very shocking to Canadians filing U.S. tax returns.

Your U.S. citizenship can trigger many other tax consequences — such as U.S. estate tax —based on differing laws south of the border. And of course, U.S. tax compliance should begin well before estate planning makes an appearance in your life. If you are a U.S. citizen or green card holder, you should be filing U.S. tax returns. If you are not filing, you should seek U.S. tax advice.

If you are a citizen of another country, you may want to determine if citizenship in that country would have any income tax consequences upon your passing.

In addition, depending upon the politics of your home country and your children’s familiarity with that country, you may wish to sell your foreign assets as you age to simplify your estate.

Important Documents (p.5)

My Will 

If you do not have a will, it's time to have one drafted. As discussed in this blog post, 65% of Canadians do not even have a will and 12% of wills are outdated. Yes, your read that correctly: only 3 of 10 Canadians have an up-to-date will. 

If you already have a will, you should review it to determine if there have been any significant life events since you last updated it. In addition, you will want to ensure all your beneficiary designations (RRSP and TFSA, for example) agree to your will and are up to date. Many people have inadvertently left significant assets to ex-spouses by not updating their designations.

There have been substantial changes to the tax laws in the last few years, which can affect the tax treatment of trusts created by will and provisions for disabled children. If you have created trusts in your will or have a disabled child, you may want to contact your accountant or lawyer to see if these changes necessitate any change to your will.

Some provinces allow for dual wills, one for assets subject to probate and one for assets not subject to probate. If you live in Ontario and have two wills, a recent case (Milne Estate, 2018 ONSC 4174) may have nullified the benefit of your will that is not subject to probate. If your lawyer has not contacted you to discuss the impact this case has on your wills, contact them yourself immediately.

News Flash: the Milne decision was overturned last Thursday.

Powers of Attorney

You should have two powers of attorney (POAs), one for your financial affairs and one for your health care.

POA’s for health care have evolved over the last few years for such matters as heroic measures and even assisted-death provisions. You may want to consider updating this document depending upon your personal and religious views on these issues.

Financial Information (p.6)

As noted earlier, you will want to ensure that the beneficiary designations for pension plans and registered plans are in line with your will and your intentions. Often these designations are out of date.

After completing the Financial Information: Liabilities section of the organizer, review and ensure you have enough insurance (see discussion below) or liquid assets to pay off any of these liabilities should you pass away. You may also wish to assess whether this is a good time to have a financial or retirement plan prepared or updated.

Insurance Information (p.11)

After completing this section, sit back and consider these three things: 

1. Do you have any unnecessary insurance policies you purchased long ago and never cancelled?

2. Do you have enough insurance based on how much you spend annually, the debt you hold and significant funding expenses you still need to incur, such as tuition for your children? 

3. If you have significant funds in your corporation (especially if you will have excess funds in your corporation you will not need in retirement), have you considered purchasing a corporate-funded insurance policy?

Employment Information(p.13)

Some issues to consider is this section are:

Ensure that you detail any stock options, deferred stock units, deferred profit-sharing plans or any other of these more complex plans. Heirs often face confusion with these plans when someone passes away, so the more clarity you can provide (e.g., dates, units, tax cost basis, purchase price), the easier it will be for your family to deal with these plans.

Most employers are very good at assisting the family after the death of a loved one, but you will put your family in the best position possible by providing as many details as you can.

Income Details (p.14)

Some issues to consider in this section are: 

1. Are you taking advantage of all income splitting opportunities? You should review this with your accountant, especially given the implementation of the Tax on Split Income (TOSI) rules.

2. Consider if your investment returns are in line with your expectations and whether you even know what your returns are. See this blog post for a discussion of this topic and some useful links.

Real Estate (p.15)

Prepare a free-form schedule that should include the following at a minimum: 

1. A notation of the year you last claimed the principal residence exemption (PRE) on the sale of your home. This will allow your executor and estate to tax plan upon death or going forward in respect of future PRE claims if you have, say, a house and cottage. See this blog post for the new reporting rules on PRE claims.

2. If you elected in 1994 to crystalize $100,000 of capital gains on property you still hold, attach a copy of your 1994 form T664 to this document. The government allowed one final election to utilize your capital gains exemption before phasing out the exemption on real estate and marketable securities in 1994.

Note: Qualified small business corporations (QSBCs) continue to be eligible for the capital gains exemption — see this blog post for details.

Financial Advisors (p.16)

Ensure you have introduced your spouse or significant other to all your financial advisors. It is much easier for a surviving spouse to deal with the aftermath of a passing when they already have a level of comfort with the advisors they will have to deal with. 

Executors (p.17)

You should review your executor appointments to ensure they are the correct people for the job.

If you have not informed your executors they have been named, you should inform them. You may want to inform the executor that you have completed the organizer so that they will know it exists and where they can find it.

If you do not have someone you can name as an executor or there is possible family conflict, consider naming an institution as an executor. 

Digital Information (p.18)

If you have digital assets of value (e.g., cryptocurrency, websites), ensure you have obtained tax and legal advice and have considered them in your will. See this blog post on the topic from estate lawyer Katy Basi.

Katy also guest posted this excellent piece on a 21st century issue: how to deal with reproductive assets in your will.

Funeral Arrangements (p.19)

This is truly a morbid topic, but ensure someone is aware of any pre-paid or funeral wishes.

Final Comments

This estate organizer is one heck of a homework assignment. But it is one of the most selfless things you can do for your family, especially if you have significant assets or complex financial affairs.

The content on this blog has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The blog cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information on this blog or for any decision based on it.

Please note the blog posts are time sensitive and subject to changes in legislation.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 

Power of Attorney for Personal Care – Mental Capacity and Medical Assistance When Dying

While I still act as a corporate accountant, I am spending more and more of my time providing wealth advisory services to my current and new clients, which allows me to utilize my tax, estate planning and general accounting background. When I combine these technical aspects together with the experience I have gained in respect of understanding the nature of people in relation to their families and their wealth, I am able to provide a comprehensive plan for their current, retirement and estate planning.

In providing these services, I always ensure my clients have up to date wills and powers of attorney (“POA”) for their finances and personal care (health). In many cases, the POAs are either very old or not even in existence. When discussing POAs for personal care, I advise my client that there have been many changes in the law in respect to heroic measures and medical assistance in dying and depending upon their personal and religious views, they need to review these issues with a very qualified estate lawyer.

I thought today, I would do a bit of a Q&A on some of these issues and specifically the mental capacity required to make these decisions. I thus turned to my resident estate and wills expert, Katy Basi, for some direction.

Please note Katy's answers are specific to Ontario, if you live in another province, you will need to confirm that province’s legislative provisions.

If you are a reader of this blog, Katy needs no introduction. If you are a new reader of the Blunt Bean Counter, check out some of Katy’s guest blogs from estate planning for extended families to New Will Provisions for the 21st Century – Your Digital Life to Cottage Trusts among many other posts.

I thank Katy for her assistance with this blog post.

Power of Attorney for Personal Care and Medical Assistance When Dying

Below is a summary of the responses to my questions from Katy. I was personally very surprised at some of her answers to my questions, but given this complex, controversial and still evolving area of law, I guess in retrospect, I should not be surprised.

Questions and Answers:

Mark: Katy, a concern for all of us as we age is mental capacity. How does mental capacity affect POA‘s for health?

Katy: “First we need to appreciate that a POA for personal care is only relevant and effective when the person in question does not have the mental capacity to make their own health care decisions. I am asked fairly commonly by my clients to include provisions regarding medical assistance in dying in their powers of attorney for personal care. This request usually comes on the heels of a discussion about whether or not to include a “no heroic measures” clause in their document. I have to tell my clients that the legislation does not allow a mentally incapacitated person to have medical assistance in dying. This is the case even if the person requested this assistance, when they were capacitated, in writing via their power of attorney for personal care.”

Mark: So, are you saying that even where you have requested medical assistance in dying in your POA for personal care, if you do not have mental capacity when the medical assistance is desired, that request is essentially voided?

Katy: “There is a clear distinction in the medical assistance in dying legislation between a person who has the capacity to make their own personal care and health care decisions, and a person who does not have this capacity. The former can request medical assistance in dying if all of the other conditions of the legislation are met, and the latter cannot. As a person’s power of attorney for personal care is only effective upon the person losing their capacity to make personal care and health care decisions, by definition the document is only relevant upon incapacity. At that time medical assistance in dying is off the table as an option".

Katy clarifying note to Mark: "This exclusion only relates to medical assistance in dying – your most recent verbal or written instructions, made while capacitated, otherwise govern your personal care and health care".

Mark: This provision seems unfair?

Katy: “So under one view the legislation is discriminatory – people with capacity can obtain this assistance, and those without capacity cannot. So, I guess that if I have a grievous and irremediable medical condition, which is another requirement under the legislation, I hope that I at least have capacity, as otherwise I cannot receive medical assistance in dying. If I am mentally incapacitated, with a grievous and irremediable medical condition, my power of attorney for personal care can request that all heroic measures stop at this point, and that lots of morphine and other pain relief be administered. But that’s it – medical assistance in dying cannot be given, and I will have to die on my own, when my body finally gives up”.

Mark: So, is there anything that can be done in case of mental incapacity?

Katy: “For some clients we include a clause in their power of attorney for personal care that indicates their desire for medical assistance in dying if they are in a situation where the other conditions of the legislation are met, in the event that the current requirement to have capacity is amended by future legislative changes. A bit of a Hail Mary, but why not?”

I thank Katy for her insights on this complex topic.

Katy Basi is a barrister and solicitor with her own practice, focusing on wills, trusts, estates, and income tax law (including incorporation's and corporate restructurings). Katy practiced income tax law for many years with a large Toronto law firm, and therefore considers the income tax and probate tax implications of her clients' decisions. Please feel free to contact her directly at (905) 237-9299, or by email at katy@basilaw.com. More articles by Katy can be found at her website, basilaw.com.

The above blog post is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers are advised to seek specific legal advice regarding any specific legal issues and for their specific province.

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.

Financial & Tax Planning for the Terminally Ill - Part 2

Last week I wrote about organizing your affairs should you unfortunately be diagnosed as terminally ill. Today I will discuss some financial and tax planning considerations if you have been given a finite period to live.

Probate Fees & Income Taxes

Upon death, your estate will be subject to probate fees (more properly called estate administration fees in Ontario) and income taxes.

In order to minimize your probate fees and/or income taxes, I recommend you obtain tax and/or legal advice.

Probate Planning

This type of planning is complex and if not properly executed, can lead to income tax and legal issues. I have set out below some of the considerations in respect of probate planning. Again, get advice before considering any of the following planning strategies:

Joint Tenancy

In order to avoid probate fees, many people transfer their assets into joint tenancy, with the right of survivorship. This means that upon the death of one of the joint tenants, the property passes to the other tenant automatically. The risk with this type of transfer is if the property is capital property (such as stocks or certain real estate) that has appreciated in value, the transfer (if to anyone other than your spouse) will create a deemed capital gain and income tax liability.

So for example: if you transfer 100 shares of Bell Canada that cost you $2,000, either directly or into joint tenancy with your son and those shares are worth $5,000 today, you will have to report a capital of $3,000 if transferred directly, or $1,500 if transferred into joint tenancy; even though you just transferred the shares and did not sell them on the open market.

Where you are terminally ill, the deemed disposition may not be as large an issue as for a healthy person since you may only be accelerating the income tax liability a few months or years. This deemed gain upon death is discussed in greater detail below.

If you transfer a bank account or stock into joint ownership with one of your children to help you manage your money while you are alive, that child becomes the sole owner of that account when you pass away. That child may consider the account is theirs even if that was not your intention and decide not to share it with the other siblings. This can lead to estate litigation, especially where your intention is not documented.

Gifting

Similar to the issue above with joint tenancy, when you gift property to someone other than a spouse there may be a deemed capital gain where the property has appreciated in value. Thus, if you wish to make a gift, you should consider gifting cash instead of property to avoid any income tax issues (be careful to ensure any gifts are consistent with your wishes in your will- i.e. if you split your estate equally with your three children in your will, the gift should be 1/3, 1/3,1/3, or you may need to amend your will). However, care must be taken to ensure you will not need that money to live on or pay medical bills during your illness. I suggest you only gift money you are absolutely sure you will not need to live on.

Consolidation of Accounts

Many of us have multiple bank accounts, investment accounts, RRSPs etc. If you are terminally ill it may make sense to consolidate these accounts into one or two accounts to simplify your executor’s life. You may also want to consider liquidating certain investments so your executor does not have to deal with these decisions. However, you need to consider the investment merits of liquidation versus the “ease of administration” issue.

Estate/Income Tax Planning

As a courtesy to your executor, gather up you prior tax returns and put them in a box or file cabinet and ensure you advise your executor where they are located. If you made a 1994 capital gains election (a special election for that year only, that allowed you to “bump” up the cost of certain capital property), provide a copy of that return.

Income Tax Smoothing

If you are terminally ill and have a finite period of time to live, from an income tax perspective, you will want to minimize your tax bill over the remainder or your life by smoothing your income as best as possible. Smoothing your income involves utilizing the lower marginal rates, rather than just the high rate on death. Typically this would be done by drawing on your RRSP or RRIF. This may have the secondary advantage of providing funds to live on.

Capital Gains

Upon death, if you do not leave your assets to your spouse or you are the last spouse to pass away, you have a deemed disposition of your assets at fair market value. See my blog on death and taxes for more details. You can utilize any capital losses against capital gains in the year of death and can carryback any excess capital losses for three years. In addition, where you cannot use all your capital losses on your terminal return, the losses are deductible against all income on your terminal return or the year proceeding death.

Purify capital gains exemption

The same deemed disposition rule holds true for shares in any private corporations you may own. As discussed in my blog “Corporate Small Business Owners: Beware; the Capital Gains Exemption is not a Gimme” shares you hold in a small business corporation may be offside the rules to claim the $800,000 Capital Gains Exemption (indexed to $813,600 in 2015) where you have significant cash and/or investments in your corporation. In order to meet the criteria to qualify for the capital gains exemption, it is often advisable to pay a dividend from the corporation to reduce the corporation’s cash and near cash assets. Where you have a terminal illness, it is imperative you review the status of your corporation with your accountant to ensure your company is onside the rules or is “purified” to qualify for the exemption.

Charitable Giving

Consideration should be given to any charitable contributions you wish to make upon death or while alive. Any donations made in the year of death are not subject to any limitations and are 100% deductible. The tax savings are worth approximately one-half of the actual contribution. The rules for donations made in your will were made more flexible in the 2014 budget.

Medical Expenses

Medical expenses qualify as a non-refundable tax credit. In the year of death, medical expenses may be claimed for any 24 month period including the date of the person's death, which were not claimed in a prior year. Sometimes you may wish to amend a prior year’s medical expense claim to utilize the 24 month period option. However, as you would typically have significant medical expenses if you are terminally ill, there is often not much to be gained by using the 24 month option as you would receive a full tax credit.

This topic is unpleasant and dealing with financial and tax planning may be the last thing on your mind if you are terminally ill. However, engaging in financial planning for your own demise is prudent and your final act of kindness for your family and/or executors.

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.

Financial & Tax Planning for the Terminally Ill - Part 1 - Getting Organized

Many of us do not consider our own mortality. Yet, if you or someone you know has been diagnosed as terminally ill, you are forced to face the reality of your/their impending passing. While the emotional and health issues are first and foremost, to lessen the burden for your family, friends and/or executor(s), it is very important to undertake both financial and tax planning.

A diagnosis of a terminal illness quite bluntly means that you are probably going to pass away in the near term. The near term for a terminal illness is defined by different medical practitioners and medical organizations as anywhere from 6 months to two years. Most likely you will not be able to work full-time (or you will want to stop working at some point) and may incur additional medical or nursing care related expenses that are not covered by the Canadian health care system.

Consequently, you may need to liquidate investments, retirement assets or draw on insurance policies to fund your day to day living and medical expenses. For the purposes of this post, I am going to assume you are lucky enough to have sufficient liquid resources to live comfortably until that fateful day.

If you have stress tested your death, as I have suggested in prior blog posts, the anxiety related to getting your financial house in order will at least be minimized. However, for today’s blog, I am going to assume you have done little to plan for your demise, and I’ll provide a comprehensive list of things you need to organize and consider.

Legal Documents to Prepare, Update, Review or Gather

1. Will(s) – Have an updated one in place

Hopefully you already have a will(s). If not, ensure you immediately have a one drafted. If you live in a province that allows you a second will (i.e.: In some provinces you are allowed to have a second will for the shares of your private company in order to minimize probate taxes; although the new rules for inter vivos trusts must be reviewed) consider whether a second will is applicable to your situation.

Where you have a will in place, ensure you review your will one final time to determine if it is up to date and reflects your current wishes. If you have not designated personal property such as jewelry and art in your will, you may now want to specify how that property is allocated; rather than leaving it to your family to sort out, possibly creating issues for your executor.

Although most terminal illnesses do not affect your mental capacity, I have seen circumstances where lawyers are concerned about the mental capacity of their clients and your lawyer may request a capacity test prior to allowing you to change your will.

2. Personal documents – Organize and store

Once you pass away, many financial institutions and government bodies will request legal documents (passports, birth certificates, drivers licence, etc.). You will therefore want to store all these documents in one place (safety deposit box) and make your executor or family aware of the location of these documents.

3. Powers of Attorney (“POA”) – Get your financial and personal care wishes down on paper

If you do not already have POA’s in place for both financial and health decisions, you will want to have both documents drafted as soon as possible. Whether you are just drafting a POA or reviewing a previously granted POA, ensure you are comfortable with your attorney (the person you have appointed) selection.

You will want to make your attorney for personal care (health) aware of your wishes for medical purposes.

4. Funeral Arrangements – Inform your executor or family about your preferences

You may have already prepaid your funeral or have specific wishes. You need to ensure any outstanding payments are made on prepaid plans and discuss your funeral wishes with your family or executor so they are aware of any specific wishes. Banks will typically allow your estate to pay for your funeral from your bank account; however, you may wish to give the money while alive to your executor so they do not have to deal with the bank.

If you were undecided about organ donations, this would be a time to make a final determination.

5. Insurance – Create a folder and summary with all your documents together with contact information

You may have life, disability, critical illness or any number and types of insurance in place. In order to assist your family and/or executor, you should create a file with all your policies, the amount of insurance and the contact information of your insurance agent where applicable.

In some cases your beneficiary designations under your insurance policies may be outdated (for example, many people still have their ex-spouse as a beneficiary) and need to be reviewed and changed. Many people also do not have updated beneficiaries for their RRSPs and RRIFs.

6. Real Estate – Organize all your deeds in a single file for easy reference

To assist your executor(s), you will want to create a file of title and purchase documents relating to your home, cottage and/or rental properties you own.

7. Information Check List – provide a list of helpful contacts

To help alleviate additional stress for your loved ones, I strongly suggest putting together an information checklist of:

•  your key contacts (lawyer, accountant, insurance agent, investment advisor, banker etc.)
•  location of assets (your bank accounts, investment accounts, and retirement account), credit cards
•  location of safety deposit box etc.

If you do not have something in place, this would be the time to prepare your list, as a courtesy to your executor(s), so they are not playing a game of hide and seek with your assets.

You will also want to summarize and provide documentation regarding any liabilities you have, such as mortgages, bank loans and lines of credit.

Finally, it’s a good idea to introduce your key contacts to your executor and/or spouse so they have familiarity with them.

8. Digital Information – provide a protected list of your passwords

As discussed in my blog Alzheimers and Death in the Digital World you will want to consider how you deal with the issue of passwords in respect of your online financial accounts and Internet/social sites.

I am going to stop here today. Next week I will discuss financial and tax planning issues you will want to consider if you or anyone you know is terminally ill.

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.

An Estates Fairy Tale

Once upon a time, in a kingdom not so far away, there lived three brothers.

Liam was the eldest. Being a natural military strategist, he was eventually granted leadership of the kingdom.

Roger, the middle son, was a gifted artist.

Earl, the youngest, was a studious sort, and became a lawyer.

The brothers grew older, prospered, and started to consider their own mortality.

King Liam, a widower, had three daughters and was unsure how to plan for the future.

(a) Which of his daughters should inherit the kingdom?

(b) Who should run the kingdom if he lost his marbles?

(c) Who should take care of his physical needs during his old age?

King Liam devised elaborate tests of his daughters’ love, fidelity, intelligence and ability to manage people and finances. He kept his advisors busy changing his plans from one day to the next, until no one, including the king, was sure which end was up. King Liam’s habit of ripping up documents carefully drafted by his advisors, making handwritten changes to those documents, and hiding the documents in various folders, cabinets, freezers, holes in the ground and other “safe” locations did not help matters.

Roger, the artist, could not be bothered to address such mundane issues. His wife had left in a huff a few years back (something to do with a very pretty apprentice of Roger’s). Roger had two sons. One son moved to a far distant kingdom. Roger lived with his other son, who cooked and cleaned for

Roger, sold his art, and generally took care of the household. Roger was very grateful to his son and felt very close to him.

Earl, the lawyer, wanted to make sure that his wife and 15 year old daughter were provided for if anything were to happen to him. He drafted the following documents for himself and his wife:

(a) Wills providing for the spouse and their daughter, carefully drafted to minimize liability for the taxes that King Liam kept instituting;

(b) An agreement between Earl and his partner addressing what would happen to Earl’s legal practice upon his death;

(c) Documents indicating who would manage Earl’s legal practice and their other assets upon the mentally incapacity of Earl and/or his wife; and

(d) Documents indicating who would make personal care and health care decisions for them if they could not do so for themselves.

Earl made sure that all of the documents were properly signed and stored in a safe place.

He communicated the location of the documents to his wife and to all of the other parties who had been given responsibilities under the documents.

The kingdom was invaded by a neighbouring king a few years later. King Liam had not been paying attention to the protection of his realm, having been distracted by the manipulative challenges he enjoying setting for his daughters. King Liam was captured and killed. Roger and Earl were also seized and executed in order to forestall the possibility of either of them making a claim to the throne or mounting a counter-invasion.

King Liam’s daughters were distraught at having lost the rulership of the kingdom. At least King Liam had the foresight, before his death, to hide away mountains of coin and to personally acquire a number of estates. The daughters’ first order of business was to acquire these assets. They formed a search party and found countless documents purporting to be wills containing different distributions of these assets. Each daughter seized the version of the will most advantageous to her and tried to claim the assets. The holders of the assets refused to deal with any of the daughters, as they were not sure which document was the last, true and valid will of King Liam. The daughters became destitute and had to throw themselves on the mercy of the new king to resolve the matter. The new king agreed to safeguard King Liam’s assets pending his resolution of their dispute, but warned them that he had other priorities at that time. While the daughters eventually obtained a hearing with the new king, the result lead to a challenge by one of the daughters and a counter-hearing, which lead to a second counter-hearing, and so on and so forth. The daughters eventually gave up, no resolution was obtained and the new king continued to retain the assets. The daughters were penniless and hated each other. They did not live happily ever after.

Roger’s “away” son came back for the funeral and to collect “his half” of his father’s property.Roger’s wife also returned, stating that she was in fact entitled to at least part, or maybe all, of Roger’s estate, as they were still technically married upon Roger’s death. The son who had lived with Roger disagreed with both of them. The “home” son stated that, before his death, Roger had given the house and all of the art to him and that Roger had declared that he was “the only true family left to me now”. In addition, the home son claimed the remainder of Roger’s assets as compensation for his caregiving services over the years, indicating that Roger’s intent was for him to inherit everything. There were, of course, no documents available to prove or deny any of the family’s claims and the three of them fought over these issues for the remainder of their lives. Like King Liam’s daughters, they submitted petitions to the new king for help in resolving their dispute. Unfortunately, all of Rogers’s assets were depleted in the process of petitioning and counter-petitioning the king. Roger’s family did not live happily ever after.

Upon Earl’s death his will ensured that his wife inherited all of his assets. An agreement required his law practice to be purchased by his partner for a sum large enough to allow his wife to maintain her standard of living. His wife, however, was heartbroken by Earl’s death and died a year later. Earl had ensured that his wife’s will was as solidly drafted as his own. As a result of this planning, a family to whom they were very close took in Earl’s daughter and cared for her until adulthood. All of the property inherited by the daughter from Earl and his wife was carefully managed by his trusted advisor, who also educated the daughter in how to manage the property herself. When the daughter was old enough and wise enough, she took over the management of her inheritance. While Earl’s daughter was understandably upset about losing both of her parents at such a young age, she never had to worry about who would take care of her and whether she would have enough money to educate herself and become self-sufficient. She did live happily ever after, with a loving family and a fulfilling career as a financial advisor.

Are you most similar to Liam, Roger or Earl? (Did any literary minds out there catch the allusions to King Lear?) Which result would you choose for you and your family? For once, a lawyer is the hero of our fairy tale….and a good estates lawyer can help you be a hero to your family as well.

This fairy tale was written by Katy Basi a frequent contributor to this blog. 

Katy Basi is a barrister and solicitor with her own practice, focusing on wills, trusts, estates, and income tax law (including incorporations and corporate restructurings). Katy practiced income tax law for many years with a large Toronto law firm, and therefore considers the income tax and probate tax implications of her clients' decisions. Please feel free to contact her directly at (905) 237-9299, or by email at katy@basilaw.com. More articles by Katy can be found at her website, basilaw.com.

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.

Stress Testing Your Finances and Your Death - The Comprehensive Test

Bloggers constantly strive for a unique idea or concept that gets people thinking, talking and even taking action. While I am not sure if my blog post on stress testing your death was unique or not (it was certainly morbid), it definitely seemed to strike a chord with many readers. I am honoured that in the weeks and months following that post a number of writers and bloggers decided to join the bandwagon to tackle this issue, adding different perspectives and expanding the concept from postmortem, to include antemortem (before death) issues.

Those articles and blogs included:

Roma Luciw of the Globe and Mail (Why you should stress-test your finances for a sudden death)
Ellen Roseman of the Toronto Star (Time to stress test your crisis readiness)
Mark from the blog My Own Advisor (Personal Finance Stress Test)
Michael James on Money (Stress-Testing your Personal Finances)

Ellen commented in her article that “Goodfield talks about the need to take precautions against sudden death. But you may be unable to take care of your finances while still alive because of illness, injury or advancing age.” The financial stress test, created by Mark, the writer behind the blog - My Own Advisor, deals with your financial well-being while alive. After considering both articles, I concluded my initial post was too limited in scope. A comprehensive financial stress test must take into account significant events that can occur while you are alive (loss of job, health and disability issues, financial loss) together with whether you have prepared your spouse postmortem to move forward financially with the least amount of stress and disruption to his/her life.

As I embarked on today’s post, I was startled by a simple yet seemingly evident revelation; antemortem and postmortem issues are so intertwined, that if you complete the specific set of tasks and summaries in my antemortem test, you will have almost everything in place to ensure your spouse is equipped to move forward financially in an almost seamless manner in the event of your death. Essentially, all that will remain is for you to discuss the preparations you have made with your spouse. The comprehensive stress test outlined below, ties this all together.

Antemortem Issues

The questions below make-up a relevant stress test for someone who is currently healthy, but also should be considered as Ellen noted, in the context of if you took ill, became temporarily or permanently disabled or were forced to slow down because of age. I have “borrowed” some of Mark’s stress test questions for the financial and administrative section. As noted above, many of the questions and tasks require you to put your finances in order while alive; so that you ease the burden on your spouse should you pass away.

Legal Documents

1. Do you have a will? If you have a will, is it up to date? If you own a private corporation, do you live in a province that provides for a secondary will?

2. Do you have power of attorneys for both your financial affairs and your health care?

3. Have you checked to ensure the beneficiaries of your RRSP, insurance policies etc. have been updated and are not a former spouse or someone you no longer wish to benefit from your death?

Insurance

1. Do you have sufficient life insurance to pay-off your debts, pay for your children’s education and allow for your spouse and children to live in the style, or close to the style, they are accustomed to?

2. Do you have disability insurance? Is the policy definition of disability narrow and you are paid if you can’t continue with your own occupation or is the definition wide ranging and you are only paid if you cannot work at any occupation?

3. Have you considered critical illness insurance? This is popular with many professionals.

4. Do you have shareholder buy/sell insurance if you own shares in a company?

5. Have you considered covering any capital gains your estate may incur upon your death through insurance? For example: if you have a cottage with a large capital gain and wish to keep it in the family, you may want to buy an insurance policy that is equal to or greater than the expected tax liability on the cottage.

Financial

1. Are you spending more than you earn today?

2. If your income dropped by 50% for 6 months what would you do?

3. If you needed more income what would you do?

4. Do you have access to money if you need it in an emergency (line of credit, savings account)?

5. If you had to retire today because of illness, could you financially adapt?

6. What portion of your monthly living costs are fixed such as car leases, mortgage payment, loan payments and what portion are variable/discretionary and could be eliminated or cut on short notice?

Taxes

1. Do you own U.S. property? Have you considered your potential U.S. estate liability and/or planned for it?

2. If you have a business, have you considered an estate freeze and/or how you will transition your family business?

3. Will you have a large income tax liability upon the later of your death and your spouse's death; because of unrealized capital gains on a rental property, cottage or shares in private companies? If yes and you do not buy insurance as discussed above, how will this liability be funded without a fire sale on the above noted properties?

Retirement

1. Do you have a retirement plan, even if just an excel spreadsheet? Do you have any idea of what you expect your monthly expenses to be upon retirement?

2. If you are near retirement, have you considered the various options in regard to taking CPP early or delaying it?

3. Have you considered how to smooth your income between the time you retire and you are forced to withdraw money from your RRIF?

Administrative

1. Have you prepared an information checklist for your executor(s)/spouse? Does it list all assets (bank accounts, investments, real estate, other) you own? Is the list up to date? It is essential that the list be complete, you do not want an after death game of Where are the Assets? This list can be paper, but I also suggest a back-up PDF be scanned into a secure computer directory.

2. As I discussed in my blog on Memory Overload, the use of multiple passwords is so prevalent that you should consider making a list of your key passwords for your spouse that is put into a secure, but accessible location. The objective of this exercise is to ensure your spouse will not be locked out of your various financial accounts because he/she does not know all the passwords.

3. Consider any accounts, safety deposit boxes, safes, etc. your spouse is or is not aware of. There are various reasons why one spouse does not make another spouse aware of some of these items. However, the reason for their existence is not relevant; what is important is that you somehow ensure that someone will become aware of the existence of these accounts or safety deposit boxes if you die be it your spouse, friend, family member or business partner.

4. A digital asset many people forget to deal with are loyalty points for travel ("Heir Miles") and retail specific loyalty programs. You should ensure you have a list of all loyalty programs you are enrolled in and the number you have been assigned. Most travel programs and some retail programs allow a transfer of some kind, upon a spouse/family member death. 

5. Do you have a list of emergency contact information for your doctor, lawyer, accountant, investment advisor, banker, etc.?

6. Have you prepared a summary of all insurance policies you have? This summary should be in an excel spreadsheet and list: the policy number, the insurance company, the type of insurance as well as the value of the insurance and staple it to the front of your insurance folder. Again, you may also want to create a special password protected file on your spouse’s computer that contains this summary information.

7. Have you informed your executors they have been appointed?

Postmortem Checklist

I wrote the initial stress test post because of my first-hand experience watching my mother cope financially with my father’s sudden and early death. In my mom’s case, she was able to lean on me to help sort out many of the applicable financial issues. Luckily, my father had at least dealt with the two most important post-mortem issues: (1) having a will and (2) having life insurance. But there was no discussion between my parents about their financial affairs before his untimely death and no lists for my mother to rely upon.

The checklist below is most relevant if you were to pass away. However, if you were to be disabled or lose capacity, some of the items in the checklist would be just as relevant. Though post mortem based, I suggest you deal with the tasks and issues below while alive. Dare I say, to do otherwise is selfish. For those of you that think this is a harsh statement, check out this New York Times article detailing the financial aftermath on Chanel Reynolds after her husband was killed riding his bicycle (Thanks to the Canadian Capitalist for this timely link).

Furthermore, I suggest that you actually stress test the checklist below by physically showing your spouse the locations of lists, computer files, insurance policies, password accounts etc. You will probably want to do a bi-annual walk through. As my wife was still asking me “where did you say you put this again”, we created a safety deposit back-up.

For those keen of eye, you will note the list of questions which in my original post were "do you have", changed to "do you know where". This tweak is based on the assumption you will undertake the antemortem test and follow through with the associated tasks and summaries. Thus, heaven-forbid you pass away; your spouse will have all the information at his/her fingertips and will not need to play a game of lost and found with your important financial documents.

The List:

1. If you have prepaid your funeral or have certain wishes, your spouse must know these wishes and where any related legal documents or invoices are located.

2. Your spouse must know where to find a copy of your will and power of attorneys and the contact information for your lawyer.

3. Your spouse must know the location of the paper or computer file containing all your insurance policies and a summary of the insurance details as discussed above.

4. Your spouse must know the location of the paper or computer file containing a summary of all your assets.

5. Your spouse must have a summary of your key passwords; these must be secure, but easily accessible.

6. Your spouse must know where you have an emergency contact list.

7. Your spouse, family member or friend must know where to find the key(s) to your safety deposit box(es) or any safe you utilize.

I promise; this is the last I have to say on this topic. I strongly urge you to take this comprehensive test for the sake of your loved ones.

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.