The consequences of a marriage contract
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Wednesday, 30 September 09 - 04:31 PM (GMT -05:00) By Sharon Alderson in Divorce |
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The following leads me to wonder "What was she thinking". Even a successful doctor (in this case a woman earning $400,000 a year) can either be so unaware of the type of man she is married to, or may have been coerced into signing a document that was not in her best interest. This situation clearly shows the value of getting independent legal advice.
A Globe and Mail quote from Sep. 23, 2009
"A Cambridge, Ont., doctor has been ordered to pay temporary spousal support of $6,000 a month to her ex-husband despite the fact that he assaulted her in 2007 and was ordered out of Canada." Mr. Justice Robert Reilly of the Ontario Superior Court said he could not ignore a 2006 amendment in the couple's marriage contract calling for Baldeep Takhar to pay hefty support payments to her husband, Ranjit Singh Takhar. “Given her comfortable income, the applicant-wife is able to afford this quantum of support,” Judge Reilly said.
The couple married in 1995 and amended their marriage contract in 2006. Six months after that Mr. Takhar pleaded guilty to assault and was given a suspended sentence and a probation order prohibiting him from communicating with his wife and two children. I understand that the law protects spouses from losing their right to support payments even if they have engaged in “misconduct” during their marriage.
In Canada we have no fault divorce so we should indeed have no fault spousal support for men and women alike. The good news in this case is a man can receive spousal support, the bad news is an abusive spouse who is not even in this country can too.
Dr. Takhar is free to argue at trial that she signed the contract under duress; lacked proper legal advice; or that the support award is “unconscionable.” The point is she must hire a lawyer and go to court, a huge feat considering her ex is not in this country.
I spoke to a gentleman recently who has custody of his children because his soon to be ex is mentally unstable. This man will soon declare bankruptcy because his wife is continually taking him to court with accusations entirely from her imagination. Where is the justcie for this man? The money being spent unnecessarily on lawyers could be put to good use to clothe, feed and educate his children.
In this case did the Judge even try to determine if there was duress? I think not. Our systmen is set up to work in a vacuum instead of thinking outside of the box and trying to determine a fair outcome.
So beware our system is not fair so protect yourself before you sign a marital agreement that might put you in an unfair situation should your union break down
To read the complete article go to
http://www.theglobeandmail.com/news/national/doctor-must-support-abusive-husband/article1297791/
Marriage and life’s other changes require an insurance tune up
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Wednesday, 30 July 08 - 04:50 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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Are wedding bells about to peal for you? Getting married is one of life's biggest changes and even though “wedding” is often just another word for “frantic”, you should take the time to contemplate one significant change your new life together will bring – the change to your insurance needs.
No, that's not very romantic, but it is absolutely necessary to safeguard your future. In fact, an insurance tune up is vital for anyone whose life has recently changed in any significant way – and there are a lot of us in that broad category. So, here's a brief look at the types of insurance protection you should consider as your life changes.
Family and debt protection. When you're beginning to build a life together, insurance should provide an economical safety net that protects your family. Life insurance accomplishes these goals by providing a lump sum to your beneficiaries in the event of your death. And, as a general rule, you should increase life insurance protection as your family grows and your lifestyle and income change.
Term insurance is usually the most affordable for young families who need a lot of coverage, but premiums increase with each policy renewal and can get very expensive as you age. Permanent insurance – either whole life or universal life – renews automatically for your lifetime, as long as you continue to pay the premiums. Depending on the type of plan you choose, the price of coverage will never go up and you can blend life insurance coverage with an investment program that delivers tax-deferred growth (subject to certain limitations) and usually tax-free benefits to your beneficiaries.
If you have a significant mortgage, you should consider a flexible option of individual renewable term insurance that allows your beneficiaries to pay off some or all of the mortgage and/or other pressing expenses (with proceeds that are usually tax-free).
Lifestyle protection. Your most valuable asset is your ability to earn a living. Disability insurance provides a regular stream of income should you become disabled and unable to work. You may have some disability insurance as part of your benefits package through your employer, but it may be capped or include exclusions or restrictions limiting payment. That's why you should look carefully at supplementing your group plan with a personal plan. And if you're self-employed, disability insurance is an absolute necessity.
As you age, supplemental health insurance plans, such as long-term care insurance and critical illness insurance, become vital. Long-term care insurance guards against the financial burden of a lengthy, debilitating medical condition. Critical illness insurance provides you with a lump sum payment when you are diagnosed with a specified life-altering illness – such as heart attack, stroke or cancer – and you can usually use the payout any way you wish.
When change arrives in your life, it's time to take stock of a lot of important things – including your evolving insurance needs. A financial planning professional can help ensure your insurance program stays in tune through every one of life's changes.
Marketplace on CBC-Mortgage Insurance
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Tuesday, 22 April 08 - 01:53 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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The Show - - MARKETPLACE (
Mortgage insurance: Not always a sure thing
If you have a mortgage on your home, chances are good you also have mortgage insurance. The idea is that if you should become seriously ill or die before paying off the mortgage, the coverage will pay it off for you. It’s meant to offer peace of mind and to reassure you that your family will be able to stay in your home if anything should happen to you. The reality falls a little short.
“Marketplace” investigated two families who bought coverage from a bank when they got a mortgage, and thought they were protected, only to have their claims denied when they became sick or died. In each case, the insurer said the applicant person had lied on their initial application form. It turns out a routine test at the doctor could be reason to deny your claim if you
Erica Johnson and Marketplace formed a study group and most participants found the forms very confusing. The bank staff selling mortgage insurance are unlicenced and rarely trained to explain the details and legalities of those insurance products. As a result people who pay premiums think they are covered, only to realize later that they are not. The insurance applications and medical records are scrutinized only after a claim is made. In one case investigated, the claim was denied because the claimant alledgedly lied. This gentleman had a medical condition that he was unaware of (high blood pressure), but he was unable to work because he developed cancer, an unrelated illness. Does being unaware of a medical condition constitute lying?
Alberta is the only province in Canada that requires anyone selling credit insurance, including banks, to be licensed. Under the Alberta regulations, banks are required to follow set requirements for training staff and disclosure to customers. When the Alberta Insurance Council first implemented this regulation in 2001, the banks fought back, pursuing the matter all the way to the Supreme Court of Canada. In May 2007 the Supreme Court ruled against the banks and said the province of Alberta was within its rights to regulate the sale of this insurance and protect the consumer. To date, no other province requires banks selling insurance to be licensed.
You should buy individual life insurance from a licensed insurance agent who will explore any medical issues upfront so you can be sure you are protecting your family.
The following are set up to receive complaints and offer advice about banking and insurance issues.
The Canadian Life and Health Insurance OmbudService (CLHIO) is an independent service set up to assist consumers with concerns and complaints about life and health insurance products and services. www.clhio.ca 1-888-295-8112
The Ombudsman for Banking Services was set up to resolve disputes between participating banking services and investment firms and their customers if they can’t solve them on their own.
www.obsi.ca 1-888-422-2865
The Financial Consumer Agency of Canada (FCAC) provides consumers with information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with financial institutions. www.fcac-acfc.gc.ca 1-866-461-3222
Canada Pension Splitting
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Friday, 21 September 07 - 12:59 PM (GMT -05:00) By Sharon Alderson in Ask Sharon |
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The Impact of a Critical Illness
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Wednesday, 12 September 07 - 05:02 PM (GMT -05:00) By Sharon Alderson in Asset Protection |
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Real cost at retirement = $224,500. By withdrawing $70,000 to cover treatment expenses, the patient loses tax-deferred growth on that amount of money. Over twenty years, and assuming a 6 per cent compound annual rate of return, the actual loss in value at retirement will be nearly a quarter million dollars
- Sources: Heart and Stroke Foundation 2004; Transplant Financial Services/Mayo Rochester 2005; National Cancer Institute of Canada; Canadian Cancer Statistics 2004.
The correct response: Do nothing
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Friday, 07 September 07 - 03:09 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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The investor conundrum: buy or sell?
From Friday's Globe and Mail
After more than four brilliant years of returns, the stock markets are plunging. What a relief. Investing in stocks is about making money over the long term, with the up years outweighing the down ones that intrude every now and then. Since early 2003, however, we've only seen the markets soar. Sure, there have been missteps, but stocks have always moved quickly higher again.
This mayhem of the past few weeks is different. It may not signal the arrival of the sort of protracted slump that gets called a bear market, but it does qualify as what investing pros call a correction. In other words, a serious but necessary pullback that smarts.
The correct response is to do nothing, and the word from investment advisers is that most investors seem to understand this. “Some of my colleagues in the office here have had clients call them saying they want to bail out,” said Greg Holohan, an adviser with ScotiaMcLeod in Markham, Ont.
“But the vast majority of people understand this is one of those things that will happen from time to time and that eventually everything will iron itself out.” Not that the short term won't be painful. Yesterday, the benchmark S&P/TSX composite index was down a shocking 585 points, or about 4.5 per cent, before limiting its loss to 1.5 per cent.
While some experts see the markets on the rise again later this year, others see the potential for losses of 20 to 40 per cent from the peak level of 14,646 reached last month. By the end of trading yesterday, the index was down to 12,848.
Falling stocks are really just a symptom of broader problems in global financial markets. It all begins with soured mortgage loans made to Americans with substandard credit ratings. These mortgages were packaged into securities purchased by hedge funds and banks which, it turns out, own a lot of similar investments based on things like credit card and car loan debt.
Concern about the solidity of these investments has created an environment of fear and uncertainty in which it's natural to dump stocks. If you feel the urge to sell, fight it. “Don't sell into a seriously down market,” said Liz Lunney, senior vice-president and portfolio manager at Fiduciary Trust Co. of Canada, a division of the mutual fund company Franklin Templeton Investments.
“Don't realize those losses. If you had an appropriate plan to begin with, then hold to it.” An appropriate plan means a mix of stocks, bonds and cash tailored to your age, risk tolerance and investing goals. Of course, some investors started with a plan and then let it slide as they watched their stock holdings balloon in the past few years.
There's extra reason to be concerned about an over-exposure to stocks if your holdings are heavy on energy and mining stocks. These sectors drove the Canadian market in the past few years, but they've suddenly gone cold as a result of fears that problems in financial markets will somehow lead to slower global economic growth.
Mining stocks as a group have plunged almost 25 per cent in the past month, although they remain up about 500 per cent in total over the past five years. Ms. Lunney said her firm's take is that global growth will remain strong, even if it does taper off a bit. And what if you still want to pare down an overabundance of energy and mining stocks? She suggests you wait until the market stabilizes rather than fleeing at the earliest opportunity.
Enough talk about playing defence. In a falling market, the savvy investor looks for opportunities to buy at cut-rate prices rather than sell. A quick shopping guide for bargain-hunting investors: Look for stocks that pay dividends, especially those like the banks that regularly increase their dividends.
Remember that while pessimism rules the market right now, good companies will prevail. “Ask yourself this,” said Gavin Graham, chief investment officer at Guardian Group of Funds. “Is Royal Bank of
An opportunity to hunt for bargains is just one of the positives to come out of the stock market's decline. The other is that an inevitable correction is finally under way after a very long winning streak. What a relief.
Don’t Let Emotions Make Your Financial Decisions
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Friday, 07 September 07 - 02:58 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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Most investment decisions are made from greed or fear. If you let these emotions take over, you may make the wrong choices. According to a 2007 Quantitative Investment Behaviour Study (QAIB) of
DALBAR says behavioural factors play a pivotal role in poorly timed sell-offs. Fear heightens the investor “herd mentality”, which will force investors to make decisions that are often against their better judgment. They tend to react impulsively if they are barraged with bad news from the media, and DALBAR says they often copy the behaviour of others even in the face of unfavourable outcomes.
Lisa Kramer, associate professor of finance at the
I also agree with the buy and hold approach the QAIB study advocates. When you experience fluctuations in the market and you listen to the media hype, after all good news doesn’t sell papers, and you have this urge to sell, it makes sense to adopt a true buy-and-hold strategy rather than trying to time the market. As an advisor I like to send articles to help my clients and invite questions at times like we have recently experienced.
See the Globe article titled “Correct Response” in Building Wealth
Another highlight from the QAIB study is the impact dollar-cost averaging can have on investment performance. Investors who use Dollar Cost Averaging versus lump sum deposits will almost always outperform their market-timing peers over the long term. You invest on a regular basis so your average cost is lower. This strategy works best if timed to your pay deposits and treated like any other expense that must be paid.
Don't wait. The time will never be just right.
Napoleon Hill
Financial Planning for Retirement Transition
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Wednesday, 16 May 07 - 07:01 PM (GMT -05:00) By Sharon Alderson in Building Wealth |
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Financial Planning for the Retirement Transition
Retirement sure isn’t what it used to be. These days, retirees live longer and healthier lives and many choose, out of desire or necessity, to take on part-time work, work full-time in a new field, or start their own businesses. Others devote their later years to travel, hobbies, volunteering, or time spent with their grandchildren. Whatever your post-career plans, it’s important to prepare for the changes in your financial life. Following are some things worth considering if you are nearing this time of financial transition:
If you haven’t already, pull out all of your savings and investments statements and records, including, RRSP and investment statements, your company’s pension plan statement, and Canada Pension Plan statement
Your next step is to decide how much money you’ll need to cover living expenses. Sometimes it is automatically assumed that older people will have fewer expenses and fewer financial needs than those still in the workplace. That isn’t always the case. If you plan to travel or to spend every day on the golf links in
What will change when you no longer go to work every day? Transportation costs? Wardrobe costs?
Do you plan to stay in your current home or sell it for a smaller place? Are you considering moving into a retirement community?
Do you hope to leave money to your children or grandchildren when you die? How much?
What percentage of your retirement income will you pay in taxes?
If you are withdrawing money from your retirement savings accounts, you will probably owe a smaller percentage than when you were working full-time.
After you’ve determined your annual living expenses, you need to estimate your life span. Most Canadians are living longer than they ever thought they would, and some run the risk of not having enough money. Don’t let that happen to you. At a minimum, estimate that you will live an additional 25 years after you make the retirement transition. Depending on your health and gender—women generally live longer—you may need to spread your financial resources over 30 or more years. What if your estimated financial resources don’t cover your estimated expenses over that period? There are two solutions: Increase your income, or reduce your expenses.
You can increase your income by taking on post-career work—whether it’s full-time or part-time. Or you can make more aggressive investments. Because aggressive investing is a fairly risky route, you should probably consult a financial professional before you buy those high-growth stocks. A financial professional can figure out how much you can afford to risk.
You may not want to look forward to reducing expenses, but it’s generally easier to accomplish than increasing your income. Consider moving, either to a smaller house, or a less expensive town.
You have several options when it comes to withdrawing money. You may take a lump sum amount (which can have heavy tax consequences) or take smaller instalment payments. Opting for instalment payments will allow you to leave the bulk of your money in investments, where they will continue to grow. Another option is to purchase an annuity with your retirement savings. This means you receive smaller distributions that are guaranteed to cover you for the rest of your life. A good strategy is to purchase an annuity with some of your savings and keep a portion invested for growth. The strategy will depend on your personal situation and comfort level.
If you have never consulted a financial professional, this is the perfect time to do it. Few financial matters are as complicated as retirement.
Tax Advantages of RRSPs
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Wednesday, 16 May 07 - 09:07 AM (GMT -05:00) By Sharon Alderson in Building Wealth |
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RRSPs have been available to Canadians since 1957, and although there have been changes over the years the basic concept remains unchanged.
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is a tax assisted method of providing retirement income
However there are other benefits of RRSPs as well. They provide a tax deduction, tax deferral, they allow for income splitting, RRSPs can also be a savings plan, and they are a good estate planning tool
Features of RRSPs:
Contributions are limited to an individual’s “unused contribution room”, which can be found on your latest Notice of Assessment from CRA
The maximum contribution limit for 2007 is $19,000
Maximum contribution is 18% of earned income from the previous tax year, less any pension adjustment plus unused contribution room carried forward from previous years.
contribute to an RRSP up to 60 days of the following year and use the deduction for last years taxes
You can also contribute to your RRSP this year and claim the tax deduction in a future year when your
income is higher. Your marginal tax rate is the rate of tax that you pay when you earn an additional dollar of taxable income. If you reduce your taxable income by one dollar, you will save at the same rate, the higher your tax bracket the higher the deduction
Example: If you invest $5,000 once a year into a RRSP at 8% for 20 yrs it will generate a tax savings (40% tax bracket) of $2,000 a yr and will grow to $247,115
Another idea is to put the $2,000 a year tax savings into a RESP for your child. This would earn a further $400 a year in government grant.
Tip: RRSPs make the most sense if you invest the tax savings.
Tax deferred means you don’t pay tax on the investment earnings until you withdraw the funds, usually when you are retired and your income is lower. The earnings on the investment are re-invested and also grow tax deferred.
Here is an example of the difference between on a non registered investment where you pay taxes every year and a RRSP
Assumptions: Take our example from above $5,000 p/yr invested at 8% with a mix of 2% each interest, dividends, capital gains and deferred capital gains, a total 8% for 20 years 40% MTR.
Market Value is $203,906. The difference is $43,209 more in your RRSP
Income splitting is arranging for income which would normally be earned and taxed in your hands, to be earned in the hands of another family member and taxed in that person’s hands.
When a higher income spouse contributes to a spousal RRSP he or she gets the tax deduction. The spousal plan will ultimately provide the lower income spouse with retirement income at a lower tax rate.
The amount of the contribution is based on the contributor’s allowable RRSP contribution room.
An individual cannot contribute to an RRP at the end of the calendar year in which he or she attains age 71, however if they are contributing to a spousal RRSP the contribution can made before the end of the year in which the person’s spouse or common law partner attains age 71.
Contributing to a spousal RRSP allows a couple to equalize the amount of income they each will have at retirement. They now each have income, so the tax burden is shared. Effective Jan 2007 pensioners can allocate up to 50% of their pension income to their spouse or common law partner; a tax splitting strategy for those over age 65, however the spousal RRSP is valuable for those retiring earlier.
Savings Plan:
RRSPs can be accessed through tax-free withdrawals under the Home Buyer's Plan. If you are a first-time home buyer, or it has been 5 yrs since you or spouse has owned a home, you may be able to co-ordinate your RRSP strategy with the purchase of a new home.
Essentially, you can borrow up to $20,000 from your RRSP (per person) to buy your first home and it is paid back over 15 years.
Tip: Contribute to an RRSP and use the tax savings for closing costs on the purchase of your home..
Borrow to go back to school. Not only can an RRSP be used for retirement or to buy your first home, it can also be used to fund your or your spouse's education under the Lifelong Learn Plan.
Similar to the Home Buyers' Plan, any withdrawals for the purpose of training or education are tax free.
You can withdraw up to $10,000 in a year to a maximum of $20,000 in 4 years but you must pay it back over a period of no more than 10 years. In both cases if you do not repay the annual amounts they will be added to your income in the year it was due
You may participate in the LLP as many times as you wish but not until the previous balance is repaid.
Estate Planning:
Unlike non-registered investments, the owner of a RRSP or RRIF (Registered Retirement Income Plan) can name a beneficiary to receive the RRSP or RRIF assets at death. The designation can be made directly through the RRSP or RRIF which would avoid the proceeds going into the estate and being subject to probate, and the asset becomes the property of your beneficiary immediately
Designating a beneficiary for a RRSP or RRIF provides some tax planning opportunities. If the beneficiary is a surviving spouse or a financially dependent child or grandchild the assets remain in the RRSP and keep the tax deferred status.
If you have a named beneficiary other than the above, the estate is responsible to pay the income tax.
Will You Outlive Your Savings?
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Tuesday, 15 May 07 - 09:27 AM (GMT -05:00) By Sharon Alderson in Building Wealth |
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A significant number of Canadians are worried they will run out of money during their retirement, according to a poll conducted for Investors Group. The poll showed 62% of non-retired respondents had some level of concern about possibly outliving their savings, with 30% saying they were "very" or "extremely" concerned. When it comes to planning for their retirement, 29% said they had no idea whatsoever how they wanted to spend their time, making it impossible to plan.
How can you achieve what you can't picture? A successful, happy retirement means doing what you want to do, and deciding what that is puts you on the path to getting there. Retirement planning requires goals. Most people start thinking about their retirement dreams in their early 40’s or later, but at 50 and beyond, it's still not too late. You have time at that point to look at what your desired retirement age is, you can look at options for making up any shortfall and you can put a plan in place. If you get a late start at retirement planning you may have to modify your original plan or reduce your current spending and ramp up your savings. Other options may be to delay retirement, work part time, or reduce your expected income at retirement. It you don’t know the numbers how will you know if you are on track?
Younger investors might need a little more encouragement to start planning. A long time horizon will certainly help when it comes to compounding the returns on their investments, but they are likely experiencing their most expensive spending years. Buying a new car or house, or starting a family is all financial transitions that need to be planned for. The value of starting early is an advantage even if you don't have a clear idea of what you want to do, and at least you should start a regular savings plan. The savings habit needs to be a part of your overall plan; otherwise the debt will get out of control.
The poll found that in hindsight, many people who had already retired would have taken a different approach to retirement planning. When asked what they would do differently, 45% of people who are retired said they would have started earlier. Forty-eight per cent of retirees said they would have saved more for their retirement and 31% would have sought professional advice sooner.
Dreams of winter getaways and increased leisure time devoted to hobbies don't match reality for today's retired Canadians, a survey suggests. Although 62% of Canadians under the age of 50 selected winter holidays as their preferred retirement lifestyle, only 30% of those who are actually retired say they escape the worst months of winter. More than half of non-retired Canadians said they expect to be able to spend a lot of time pursuing hobbies, but only 35% of current retirees said they pursue hobbies to any great extent. Contrary to the perception that retirement is endless days on the beach or in a rocking chair, the fact is that priorities shift as people move from one life stage to another. A great number of Canadians have underestimated their retirement needs, including the cost of long term care.
Similar to previous polls, the survey also found that many younger Canadians have not even begun to plan for their golden years. About half of those under 50 said they have not thought about retirement, and not surprisingly, those who haven't considered retirement are less likely to have accumulated savings or calculated how much they will need to retire. Most Canadians under 50 years old are too busy in their careers and raising children to seriously consider what they will do when they retire. That approach could be a mistake. Retirement should be something Canadians can look forward to if they plan and save throughout their careers.
An Ipsos-Reid poll conducted for RBC suggests that more than half of Canadians aged 18 to 34 do not plan to contribute to their retirement savings this year or don't even have an RRSP. Young Canadians who ignore RRSPs are missing a golden opportunity. There is no overstating the great advantage of youth when it comes to building an RRSP. The sooner you start the greater benefit that compound growth will have on your portfolio.
A third poll, conducted by Ipsos-Reid for Scotiabank suggests that Canadians may be more concerned about paying down debt than saving for retirement. Nearly 80% of those surveyed said paying down debt is their number-one financial goal, while 60% selected retirement saving as their top goal. The Scotiabank survey also found that only 38% of Canadians are confident in their ability to achieve their financial goals even though they have a strong desire to reach them.
A lot of people don’t know where to begin to plan for retirement. Here is where a financial planner can be really helpful in steering you through that process. A financial planner will do an asset allocation review for you, projections of how much you should be setting aside each year, identify what your tax savings are and how much your investment will grow on a tax-deferred basis in an RRSP.
Clearly more Canadians need to take action and establish a written financial plan to set out their goals.
... More items are available in my News Archive
