In This Post
Review your Will
Review your beneficiary designations
Review your life insurance needs
Protect yourself from fraud and identity theft
Control lifestyle expenses
Get critical illness insurance
Review your Will and Power of Attorney
Only about 40% of Canadians have prepared their Wills and power of attorney and many of them are not up to date. Situations and families change and your Will and power of attorney should be updated to cover those changes. If you don’t have a Will, get one.
Have a lawyer prepare your Will for you. The lawyer will also insist on the power of attorney and substitute decision appointment be done at the same time. Not sure what that is or whom you should choose, then you should avoid do-it-yourself Will kits, your lawyer will explain and help you make a wise choice. They may state they are legal (which just means they don’t break any laws), but they also contain a disclaimer that states they are not liable for the validity of the Will you prepare yourself. An invalid or poorly prepared Will can cause delays and may cost your family thousands of dollars in avoidable fees and expenses.
Review your beneficiary designations
You named a beneficiary on your life insurance policies, RRSP,TFSA and pension plans. Has anything changed? Keep in mind tax implication of naming a non spouse as beneficiary.
If you have named a beneficiary who has trouble handling money, you can stipulate that any proceeds be used to set up a spend thrift trust to provide an income only for that person. If all your children are adults, consider naming them as secondary beneficiaries to your spouse. If you are on a second marriage consider a spousal trust to ensure assets stay with your blood line.
Review your life insurance needs
As we age and our debt load hopefully reduces while our assets increase our needs for insurance change from income replacement and debt repayment to retirement income and estate preservation. Your plans should be updated to make sure your income and estate objectives can be met. As your needs change so also does the type and amounts of insurance.
The basics for determining life insurance needs are Immediate Cash Needs plus Capitalized Income Needs minus Assets to be Liquidated at Death plus Life Insurance proceeds. Your needs should be reviewed regularly and adjusted as your situation or health changes.
Protect yourself from fraud and identity theft
Fraud and identity theft are the fastest growing crimes today. According to the Canadian Anti-Fraud Centre, 12,891 victims lost over $53.7 million in 2012. To protect yourself:
Cover the keypad while entering the PIN when using your debit or credit card.
Be aware of anyone around you using a cellular phone when you are using your debit or credit card. They may be photographing your transaction.
Shred old credit card and bank statements. Just ripping them up is not enough to prevent a fraudster from piecing them back together.
NEVER give personal or account information to anyone who contacts you, even if it appears to be from a company or bank you deal with. These companies will never ask you for your personal information, they should have this information already.
Control lifestyle expenses
According to Calgary bankruptcy trustee Barry Nykyforuk, the most common cause of personal bankruptcy is letting consumer debt get out of control. Credit is so easy to get and some lenders even target those who have had debt problems in the past.
When you use credit cards, pay off the balance each month. If you carry a balance, be aware that any new purchases are charged full interest from the time they are made. Don’t fall into the trap of buying things you don’t really need with money you don’t even have to impress people you don’t even like.
Consider critical illness insurance
If you survive a critical illness like cancer, heart attack or stroke, your finances will be affected. Even if you have disability insurance, it may not be enough to cover additional expenses that arise. Critical illness insurance pays a benefit that can help you get on with your life and maintain the lifestyle you had before you got sick. – M Dumond
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