I know what you’re asking….You’re a financial advisor, did you lose all of your financial senses and fall prey to the evil temptations of overspending? Or is it a smart real estate investment? Did you abandon my financial plan? Or did I make a smart, conscious, logical investment decision?

So why did I do it?

Let’s begin with my first visit to Florida…

In Grade 12, I met my late wife, Mary, and quickly learned her parents owned a home in Fort Lauderdale.

I thought I had won the lottery. I met a beautiful woman with a Florida property…. What could be more exciting for a Toronto boy who had only ever been to Ontario beaches?

During our first year in university, Mary’s family asked if I would join their vacation to Fort Lauderdale (well, I may have asked first), and I immediately accepted.

The trip included Mary, her parents and me. It wasn’t an intimate experience in any way, but I was so excited about visiting Florida that I didn’t mind the lack of privacy.

Turns out they owned a two-bedroom, one-bath bungalow approximately 10 miles from the nearest beach. But the community had a neighbourhood pool, tennis court and a big supermarket which sold beer and wine (how novel!).

Mary and I would borrow the neighbour’s car (no Ubers back then) and drive to Lauderdale Beach and spend hours in the water, sunbathing and walking through the Fort Lauderdale strip.

When we didn’t feel like hitting the beach, we would visit the local attractions, such as the Mai Thai restaurant, the drive-in movie theaters, and the outdoor flea markets, and also ride our bikes around the many communities.

We were 20 years old, madly in love, and without any responsibilities. We were free. Do you remember a similar experience of complete freedom?

I will never forget that trip.

It was more than I could ever expect, and I fell deeply in love with Mary (and Florida). We promised each other that one day we would buy a Florida property and bring our own kids to this beautiful beach and state.

Mary and I continued to visit Fort Lauderdale and eventually brought our kids to its sands and also to Miami, Hollywood, and Boca Raton. We also spent several vacations in Orlando, where we enjoyed the attractions at Disney and Universal Studios.

I can’t exactly put the appeal into words. But I feel connected to the sand, saltwater and attractions that the state of Florida offers.

Initial considerations before buying a Florida condo

It’s obvious I have an emotional connection to Florida. But I have taught clients to make investing decisions with their brains and not their emotions, so how do I justify buying a vacation home?

As you read, keep in mind that my economic rationale can also apply to buying a cottage property on Georgian Bay or any other place you’re drawn to.

Buying a vacation property involves the following considerations:

• The initial purchase price
• Any upfront renovations and all ongoing capital maintenance
• Furnishings (i.e. kitchen appliances, furniture, bedding, and so on)
• Property taxes
• Hydro, Internet, phone and other home expenses (including condo fees)
• Traveling costs (gas or airline tickets)

In short, it’s not cheap to own a second property, and affordability should be carefully analysed.

Here are three tips to see if you can afford a second home.

1. Pay off the mortgage on your principal residence first.

Increases in the value of your principal residence are tax free, while the interest on the mortgage is not tax deductible. Hence, your mortgage should be your first priority. Also, I suggest being debt free before considering a second home.

2. Buy the property with cash.

Only buy what you can afford to pay in cash. If you don’t have cash surplus, wait until you have built up enough money to buy the second property with cash (I waited until I was 59 years old).

3. The additional monthly expenses should not increase the monthly budget.

If your second home costs $1,000 per month to carry, I suggest reviewing your current budget and reducing expenses by approximately $1,000 per month.

In my case, I will be selling my second car to remove that carrying cost, dropping my cable service and using Apple TV, buying out my remaining car and eliminating lease payments, and dropping an old life insurance policy that I no longer need as the kids are self sufficient.

These changes will completely offset the additional costs of the Miami condo.

Here are three tips to see if you can afford a second home.

Will the second home be used?

During the pandemic, many people felt they “needed” a Peloton. If you’ve never heard of a Peloton, imagine a stationary bike with a screen and an Internet connection.

Now that we’re hopefully close to the end of the pandemic, many of those people no longer feel the same “need” because now they can visit the gym or simply cycle outside. I expect many unused Pelotons will soon be collecting dusk in basements across the country.

What’s my point? Like a Peloton, a second home may be a short-term attraction that is used extensively during the first few years but gradually less and less as its enjoyment fades.

I don’t have to remind readers that the monthly expenses keep accumulating regardless of whether the home is or is not used.

Once your family has decided to buy a second property (and can afford it), I suggest renting for a few years to assess whether the home will be used for the long-term.

Do I expect the Miami condo to appreciate?

I have no idea if my condo will appreciate over the years (or decades), but I do expect it to hold its value and appreciate at the rate of inflation. If my expectations are correct, I will always be able to sell it for the same money I invested on day one (inflation adjusted).

So, if my finances ever deteriorate, I can reclaim my expenses.

Finally, should you buy a condo or second home?

Go ahead and buy the property once you have determined:

• You can afford a second home.
• The home will be enjoyed for many years to come.
• It is located in a real estate market where, historically, buying/selling is well established and can be accomplished without triggering a “fire sale.”

Note that I have avoided discussing the US tax code and its effects (if any) on the purchase of US property by a non citizen and/or a non resident.

I suggest discussing this issue with a tax accountant specializing in Canada/US tax law.

If you are thinking of buying a second home but not sure if you can afford the purchase, please give me a call and I can help you walk through the thinking and make a final decision.

Never Retire Profile

Novak Djokovic

For a long time, it’s been impossible to think about men’s tennis without the name Novak Djokovic jumping to mind. Along with a small handful of other players, the “Serbinator” has been dominating the sport for many years and won the French Open this month. At the age of 34, Djokovic’s 19th Grand Slam was no small feat. Along the way, he beat fellow “old-timer” (for tennis) Rafael Nadal in an exciting semi-final and then played one of the matches of his life against an up-and-comer, 22-year-old Stefanos Tsitsipas, for the win. With this achievement, it’s possible that the best tennis player this year is about to become the greatest tennis player of all time. If Djokovic defeats Nadal and Roger Federer later this year, he’ll be tied with them at 20 Grand Slams each. In his present form, he looks able to blast past them. Whatever happens, this aggressive baseline player is not ready to retire.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier.

Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind.

Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
—

Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/why-i-bought-a-miami-condo-and-how-i-rationalized-the-purchase/

Garth Dingwall, a partner at Abrahams LLP, is my guest on the podcast this week. Garth has a broad practice focusing primarily on commercial and civil litigation, has acted in a variety of corporate commercial matters, and has a keen interest in business law. As you will hear today, he has a great deal of experience and skill in resolving disputes for his clients in the most effective and efficient manner so that they can remain focused upon managing their businesses and living their lives. He has successfully represented clients before the Ontario Superior Court of Justice, the Ontario Court of Justice, and the Ontario Court of Appeal.

In today’s interview, Garth details his journey to becoming a lawyer, his reasons for moving from his own business to a larger firm, the role of a litigator, and some examples of the types of disputes with which he has worked recently.  While he goes on to describe how he saves, invests, and protects his income, I also respond to some of his questions regarding my perspective on financial planning and the importance of disability and critical illness insurance.  As open to asking questions as he is to answering them, Garth makes for an excellent guest here today, bringing to light so much information that will prove both fascinating and informative for listeners.

Listen to the podcast – Download the transcript

Highlights:

• As a commercial litigator, Garth works with people and business owners who find themselves in a dispute by strategically advising them on how to resolve it and moving forward to execute on that strategy by aggressively advocating for them at all points in the process.
• He frequently works on resolving construction litigation matters, shareholder and business disputes, franchise disputes and employment disputes.
• His low point came while having to do everything himself in his first year of running his own business, but it became an opportunity to improve because of how much he learned at that time.
• Garth has been saving money for a long time, and he started by putting his bonuses into RRSPs.

Quotes:

“Within the firm, there’s, of course, more staffing available to you. So, your ability to take on more work, and therefore, in the long run, be able to generate more revenues and improve profitability – there’s a good path there.”

“So, there’s always the opportunity to settle, and we’re always looking to do that if it benefits the client.”

“There’s an old adage in litigation…that you want to sort of treat every file as though it might go to trial.”

“I focused on the RRSP first…before increasing mortgage payments, because that reduces the amount of tax at least in that year that you’re paying, and also, the goal is to have money put away for financial independence at some point.”

Follow us on social:

Listen to more podcasts by Richard Dri:

Tax Law and Preserving Wealth with Mahyar Makki

The Legal and Personal Aspects of Estate Administration with Susannah Roth

From Rock Star to Founding Partner with Ryan Martin

source https://richarddri.ca/corporate-dispute-and-financial-planning-resolutions-with-garth-dingwall/

U.S. and Canadian equity markets have been moving sideways for much of the week, as investors weigh concerns about inflation against signs that the economic recovery is gaining steam. It was a fairly quiet trading session Monday with the Dow slightly off, and the Nasdaq registering a modest 67-point gain. The S&P and TSX were flat.

It was another muted session Tuesday with the S&P flat again, the 12th consecutive day without a 1% move in either direction. The Nasdaq and TSX registered small gains, while the Dow was slightly off.

As expected, the Bank of Canada on Wednesday left its key interest rate unchanged at 0.25% and said it would maintain its current policy of quantitative easing. U.S. indexes edged quietly lower Wednesday, while the TSX shed 64 points.

In inflation news, U.S. consumer headline prices rose 5% in May from a year earlier, marking the highest annual inflation rate since 2009. Investors are waiting to see if the latest data will cause the Fed to dial back current efforts to stimulate the economy. Central bankers will meet next week to discuss their options.

Read more

source https://richarddri.ca/north-american-markets-range-bound-as-investors-weigh-inflation-concerns-labour-data/

It’s been a fairly quiet week for U.S. markets, which were closed Monday for Memorial Day. In Canada, the TSX closed out a fourth consecutive month of gains, despite dropping 121 points in May’s final session on Monday.

The TSX started June with a bang, however, touching the 20,000-mark on Tuesday intraday for the first time in history. By Tuesday’s close, the TSX had jumped 245 points, closing at 19,976 after surrendering a bit of ground in afternoon trading. Since March 2020, the Canadian benchmark has risen almost 80%.

Meanwhile, major U.S. indexes finished fairly flat Tuesday after fresh data showed that U.S. manufacturing activity continues to be hampered by rising commodities prices and worker shortages in some industries.

Read more

source https://richarddri.ca/tsx-hits-20000-mark-u-s-markets-struggle-for-traction/

It was a bounce-back day for U.S. stocks Monday, led by rebounding technology shares, as investors become more comfortable with the current inflation outlook and the pace of the economic recovery. The question for investors remains whether the recent hike in prices is temporary or part of a longer-term trend. Energy and materials companies that are able to pass along higher costs have been in favour, while high-growth technology names have lagged. By Monday’s close, the Dow was up 186, while the Nasdaq and S&P climbed 190 and 41, respectively. The TSX was closed Monday. Monday’s enthusiasm waned somewhat Tuesday as U.S. stocks were fairly flat across the board, while the TSX managed a slight 37-point gain, enough for a new record close. New U.S. housing data showed home-price growth climbed in March to its highest level in 15 years, as strong demand for housing continues to outstrip supply. There were green numbers all across the board Wednesday after the Federal Reserve reiterated its pledge to maintain its economic support despite a recent uptick in inflation. A clear sign that inflation fears are easing was Wednesday’s reading of the Cboe Volatility Index (i.e., the VIX), which dropped to its lowest level since early May. U.S. markets turned in another mostly positive performance Thursday, with the Dow up 141 points, while the S&P and Nasdaq were essentially flat. In another sign of the ongoing U.S. recovery, initial jobless claims fell again last week to a new pandemic low—just over 400,000. In Canada, the TSX posted another modest 29-point gain.

Read more

source https://richarddri.ca/n-a-markets-stabilize-as-inflation-concerns-ease/

For many families, cottages are a prized second home, holding sentimental value after a lifetime of special moments and great memories.

However, when the time comes to pass on the family cottage to the next generation, doing so without a succession plan to deal with questions and conflicts that may arise can be emotionally and financially challenging.

While many individuals tend to first focus on financial matters like tax considerations, an effective cottage succession plan addresses financial as well as emotional issues.

Who should the property go to?

The best solution may not always be the standard default of leaving the cottage equally to all children. After all, they may not have the same interest in the property or the ability (due to distance or cost considerations) to enjoy and maintain it. As such, a “cottage conversation” involving all stakeholders is often a great place to start.

Parents are encouraged to ask their children whether they want to take over the cottage and, if so, how best to transition it to them. Where an unequal transfer of the cottage is envisioned, it may make sense to consider other means of balancing or equalizing the overall transfer of estate assets.

Tax considerations

Unless the principal residence exemption is available, capital gains tax will apply when the cottage is sold or otherwise transferred to the next generation. This tax applies to the difference between the adjusted cost base (ACB) of the cottage and its fair market value at the time of transfer or sale.

The ACB may be the purchase price of the cottage or the value as of a different date (for example, 1972 when the capital gains tax was introduced, or 1982 when it was no longer possible for a couple to designate more than one property as a principal residence). If capital improvements have been made to the cottage (and can be supported by documentation), these costs may be added to the ACB, reducing the capital gain.

Can life insurance be used?

Life insurance can be a cost-effective method of providing cash to pay capital gains tax payable on death. Insurance may be purchased on the single owner of the cottage or, as is more often the case, on the joint owners.

A “joint last to die” policy, payable on the death of the survivor of parents, will cost less than either parent could buy individually. Insurance proceeds are received tax-free, whether payable to the estate or a designated beneficiary.

Depending on the situation, the children (who are usually the ultimate beneficiaries of the cottage) may be in the best position to pay the insurance premiums. Life insurance may also offer a solution where the estate plan calls for the transfer of the cottage to one child and an “equalization payment” to another. Obviously, this solution won’t work where the parents’ health precludes them from qualifying for life insurance.

Transfer to a trust

Where the decision has been made to transfer the cottage to the next generation, consider transferring the property to an inter-vivos trust. A transfer to a trust offers a number of potential benefits.

A discretionary trust can be useful where the ultimate beneficiaries of the cottage haven’t yet been determined. A trust can help ensure the cottage is enjoyed by the children and ultimately passes to the grandchildren (if any). A trust may also offer some protection against future creditors or matrimonial claims. Because the transfer generally triggers the realization of capital gains, this option usually makes sense only where there is a small gain or even a loss.

Going forward, taxes on any increase in value will be the responsibility of the next generation. It’s also worth remembering that the “21-year rule” may need to be considered as trusts’ properties are deemed to be disposed of every 21 years and will realize accrued gains at that time.

Trust arrangements can be complex, so it’s important to obtain proper advice and understand all the intricacies before taking this step.

Transfer into joint tenancy

It might be tempting to transfer the cottage into a joint tenancy with the children in an effort to reduce probate fees. While this may allow the property to be transferred outside of the Will by “rights of survivorship,” there are potential pitfalls.

Be aware that such a transfer will trigger the realization of capital gains. Moreover, this approach could expose the property to creditor or matrimonial claims that may be brought against any of the owners (note, this option is not available in Quebec).

A cottage can be a source of great enjoyment for the entire family.

Taking the time to develop an effective transfer plan — one that addresses emotional as well as tax and other financial issues — may prevent conflicts down the road, providing everyone with invaluable peace of mind.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier.

Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind.

Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
—

Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/keeping-the-cottage-in-the-family/

Joining me this week on the podcast is Mahyar Makki, Partner – Tax, Corporate & Commercial Litigation, Class Action Litigation, at Quantum Business Law. In addition to class actions and business disputes, Mahyar’s practice involves all aspects of tax dispute resolution, commencing at the objection stage with the Canada Revenue Agency, right to the appeals stage at the Tax Court of Canada and to the Federal Court. He also works with high net worth clients for wealth preservation, estate freezes, butterfly transactions, corporate reorganizations and establishment of domestic and international trusts.

In our conversation, Mahyar describes his areas of responsibility at his firm, offers advice for business people regarding preserving their wealth, and explains butterfly transactions, purifying companies, corporate reorganizations, and international trusts. He also shares what has surprised him the most in dealing with the CRA, the low point he has experienced pursuing his career, his advice for those looking to open their own business, and how he saves, invests and protects his income. Our interview draws to a close with Mahyar providing his definition of, and plan to achieve, financial independence, and, at his request, I offer mine as well.  Our conversation is a wide ranging and fascinating one, but all listeners should realize that Mahyar’s comments here today do not represent recommendations, and anyone thinking of tax law should seek their own personal advisors before implementing any of the topics discussed in the podcast.

Listen to the Podcast – Download the Transcript

Highlights:

• Mahyar’s main advice for business people regarding preserving wealth is to implement creditor proofing, succession planning, and tax savings.
• Setting up an international trust for your family gives an extra layer of protection from creditors.
• His advice for those looking to open their own business is to set the foundations of how you’re organizing your company early on, and to not give up on whatever you want to do.
• Mahyar invests in stocks and real estate, and always puts money toward his TFSA.
• He believes that true financial independence buys you time to do those things you want to do.

Quotes:

“You’ve built your whole life building wealth for you and your family. One of the things you can do is creditor proof.”

“They call it butterfly because the transaction will go back and forth, back and forth, and it creates a butterfly effect.”

“When I got anything from the CRA, I would always take it at face value, and I’d say, “I owe this much.” I wouldn’t even double-check it. I think that’s what most people do. And through my experiences I’ve learned, that’s not always true.”

“Truly not having to show up to work if you don’t have to. I think that’s financial independence, is buying time.”

Follow us on social:

Listen to more podcasts by Richard Dri:

The Legal and Personal Aspects of Estate Administration with Susannah Roth

From Rock Star to Founding Partner with Ryan Martin

Enjoying a Long Career and Still Growing with Corporate Immigration Law Expert Joel Guberman

source https://richarddri.ca/tax-law-and-preserving-wealth-with-mahyar-makki/

Relaxing by a lakeside cottage is a quintessential Canadian experience. But for many families, their cottage property was purchased years—and in some cases, decades—ago, and as the family structure has evolved, questions may begin to arise about how to share it fairly.

Ensuring you have a clear and current understanding across generations on ownership and usage will help make family time at the cottage more enjoyable and harmonious.

A cottage sharing agreement, negotiated, and implemented while parents are still actively involved, may be just what your family needs.

Creating a cottage sharing agreement

This practical agreement details agreed-upon guidelines on how to transfer cottage ownership and control, with the goal of keeping the property in the family.

Specifically, the agreement can help ensure:

• The cottage is safely passed from one generation to the next
• Children become stewards for the next generation
• A structure is in place for children when the parents are no longer involved — this can include outlining financial responsibilities, use-sharing issues, division of labour and a fair method of dispute resolution

What specifics should a cottage sharing agreement include?

Ideally, all cottage sharing agreements should be made between active parents and their children to avoid any surprises or tension after parents pass on and the will is read. The more complete a cottage sharing agreement is, the better it will serve the family.

Here are a few points to consider and include in the agreement:

• Who gets to use the cottage? Owners only, the family of owners, or friends? Are guests or non-family members permitted?
• How will you use the cottage? Should all children use it together, or will time be split evenly between siblings? Is there a time when no one should use the cottage?
• What are the house rules? When a child stays at the cottage, what are their responsibilities? What items or activities are prohibited, for example, pets or smoking?
• Can it be rented to others? Can any of the children rent out the cottage during their allotted time or during non-use? How will revenue be shared?
• How should costs be shared? How will utility bills, municipal taxes, and insurance premiums be split among children? Should ongoing costs be shared equally or in proportion to usage and/or affordability? Who is responsible for paying these bills on time?
• Who is responsible for opening and closing? If it is a seasonal property, who will take the lead to open and close the cottage?
• Who oversees maintenance and repairs? Which improvements should be budgeted for to ensure the cottage’s upkeep? Who should take the lead on updates and repairs?
• How should collective decisions be made? For example, by majority vote or a unanimous one?
• What are the inheritance guidelines? If an heir dies, should the surviving spouse inherit the share of the cottage? Or should it be passed down to the individual’s children?

A cottage sharing agreement process is designed to proactively deal with issues like these, to avoid possible future friction.

Keeping it in the family

When it’s time to pass on legal ownership to the next generation, a cottage sharing agreement can help clarify the process. Without an agreement, any owner can apply to the court to have the property sold, and his or her share paid out. With an agreement in place, owners agree to give up this legal right to force a sale.

As mentioned, the cottage sharing agreement should provide for a safe inheritance path. Some questions to think about include:

• Does an owner’s share go to the surviving spouse, who may later remarry?
• Does the share pass on to the deceased owner’s children?
• Should the surviving parent have a life interest, ensuring his or her continued right to use and enjoy the cottage?

A cottage sharing agreement can help effectively address the inevitable issues of inheritance like these.

Promoting family peace

No matter how cooperative children may be, it is inevitable that issues will arise from different opinions. A prime purpose of an agreement is to provide ways to prevent these from developing into full-blown family disputes.

Differences of opinion amongst owners on how to proceed may best be decided on with a simple majority vote. This tends to work well for non-critical decisions such as redecoration or usage. More complex issues, like additions to the cottage or a sale to non-family members, may require unanimous approval. An agreement may also provide for amicable approaches like mediation.

Family council

Many cottage sharing agreements provide a family council meeting, a routine time or date for family members/owners to discuss and decide on cottage matters. These are generally annual meetings held in winter and include discussions about setting a budget for operating expenses and agreed-upon repairs and improvements.

If the cottage sharing agreement provides for periods of exclusive usage, then the family council is the most appropriate time and place to figure out who gets which block of time. Considering significant matters, like when to schedule repairs, decide on improvements and budget appropriately, can also be covered during a family council. The council can also choose how to allocate responsibilities for the upcoming year, including bill payments, opening and closing, sharing chores, etc.

Getting started

Even the most carefully thought-out cottage agreements will not prevent the occasional sibling disagreement or family friction. The goal, however, is to diffuse most problems before they become an issue.

Cottage succession planning may involve several experts, including wealth advisors, appraisers, and estate and trust professionals, to get the job done well. The agreement is a legal contract, so starting the process with a lawyer who can identify the issues, provide recommendations and a draft agreement to discuss with your family will save time and avoid trouble.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier.

Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind.

Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
—

Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/how-to-successfully-share-the-family-cottage/

This week, my guest on the podcast is Susannah Roth, a Partner at O’Sullivan Estate Lawyers.  Susannah’s practice focuses on multijurisdictional and cross-border estate administration, and she has been recognized in both the 2019 and 2020 editions of The Canadian Legal Lexpert Directory as a Leading Practitioner in Estate & Tax Planning (Repeatedly Recommended) and Estate Litigation (Repeatedly Recommended). She is recognized in The Best Lawyers in Canada 2020 in Trusts and Estates, and is also a columnist in The Lawyer’s Daily, published in Canada by LexisNexis, on estate administration, estate planning and cross-border issues.

In today’s interview, Susannah enlightens us all on the role of an estate administrator, the importance of having a will and when to get one, her practice and its clients, and the O’Sullivan Estate Lawyers’ marketing system. She also shares her perspective on the biggest challenges facing estate lawyers these days, and discusses one of her biggest personal challenges – sadly, one that we share – the loss of her partner in life and the impact that has had upon her. Our conversation concludes with Susannah offering her advice for those who are newly widowed, and what financial literacy means to her now. Thoroughly versed in the legal aspects of estate law, and, tragically, all too familiar with its personal impact, Susannah demonstrates her extensive amount of knowledge, wisdom, and true courage in today’s unforgettable episode.

Listen to the Podcast – Download the Transcript

Highlights:

• Estate and trust administrators assist executors and trustees to understand what it is that they need to do when they’re administering an estate or trust.
• Married spouses are included under the current Ontario legislation, but if you have a common law spouse, they don’t automatically inherit from you.
• Susannah’s firm advises everyone to have a will regardless of how young or how old they are.
• The loss of Susannah’s husband has impacted her life in many ways, including increasing the level of difficulty in parenting for her, causing her to reevaluate many of her goals, and making her more empathetic with clients who are experiencing the same tragedy in their lives.
• Currently, her definition of financial independence is having the financial ability to pay for all of the expenses that she has, to save for the future, to have a little bit of fun, and to be able to take care of her son and to be able to provide for his future.

Quotes:

“If you don’t make a will, then what happens when you then pass away, is that the legislation in the province that you live in, will dictate who inherits your assets.”

“But to have at least a simple set of legal documents. Yeah, I think as soon as you own anything if you’re over the age of 18, you should definitely do that.”

“I think that a lot of people maybe don’t understand how that can be valuable, and paying for the appropriate advice is sort of like insurance in that sense.”

“If doing a thing, making this decision, either for or against, like, doing the thing or not doing the thing, makes you feel like you’re going to vomit, then it’s wrong, it’s not the right time to make the decision, you’re not ready for it, or it’s not the right decision.”

“I think because it is obviously…such a significant life event, it’s a good idea to look at your will and your powers of attorney when your spouse passes away.”

Follow us on social:

Listen to more podcasts by Richard Dri:

From Rock Star to Founding Partner with Ryan Martin

Enjoying a Long Career and Still Growing with Corporate Immigration Law Expert Joel Guberman

Finding Success Through Building a Collective Legacy with Mohamad Fakih

source https://richarddri.ca/the-legal-and-personal-aspects-of-estate-administration-with-susannah-roth/

Readers of this blog know I have three children, two adult boys and one teenage girl. Like many of you, I struggle with some parenting issues, but perhaps the most challenging is how to teach my kids about money (yes, it’s even challenging as a financial advisor!).

The good news is, I have a plan that I believe will help us all be better at educating our children about financial responsibility, saving and investing.

But before I explain, let me share a quick story…

Years ago, I took my eldest to buy a pair of running shoes and gave him a budget for his purchase—let’s say $100 for the sake of this blog. I believed the budget to be enough to purchase a good shoe, but not necessarily the “coolest” shoe with the name a basketball star stitched on the side.

As we approached the running shoe display, my son’s eyes opened wide and his jaw dropped. He looked like he had just walked into Santa’s toy factory.

The store had basic shoes and mid-range shoes, but the majority were awfully expensive and connected to high-profile athletes. I reminded my son of his budget and left him to ponder his options and select something appropriate.

As you might expect, he couldn’t find a shoe that fit his budget. In fact, the only shoe he liked (or should I say, “absolutely needed”) had a price of about $250.

He started negotiating the budget with me (and he’s a very good negotiator, even today), but I stood my ground. Finally, he suggested visiting a discount shoe store for better prices and I agreed.

Unfortunately, he didn’t find the shoe at a better price, so we had a father-son standoff. Eventually, I concluded the negotiation by saying he could buy shoes that fit our budget, or he could continue wearing his current shoes.

He didn’t buy new shoes that summer and instead wore his old shoes right into the fall. But I hoped he learned a lesson about budgets.

Today, my children are much older and lessons are harder to teach. But I have a plan for how we can teach our adult children about money.

The plan’s background

Many readers have investments in their non-registered plans (cash accounts) and a willingness to gift their children small amounts of money, if it helps them learn about finances and save for their future.

Allow me to introduce the Tax Free Savings Account (TFSA), a registered account that permits an annual contribution of $6,000 (2021 limit) an accumulative contribution limit of $75,500 (as of 2021).

Contributions to TFSAs are made with after-tax dollars but the funds grow tax free while in the plan. Let me say that again: MONEY IN A TFSA GROWS TAX FREE!

And it gets better…

When the money is withdrawn (e.g., for retirement), there’s no tax on the growth.

And it gets even better than that…

Funds can be withdrawn (tax free) and can be returned to the TFSA in the next calendar year, without any tax consequences.

Our principal residence has the same characteristics: it’s purchased with after-tax dollars, it compounds tax free and, when sold, any capital gains are tax free.

I don’t know how long the Feds will permit annual TFSA contributions (given the huge projected deficit), but I suggest, where possible, taking full advantage of one of the very few tax-favoured vehicles allowed to Canadians.

The plan

If Mom and Dad have maximized their RRSPs and TFSA contributions AND they have a few extra dollars in their non-registered accounts, then it’s time to transfer funds to their kids’ TFSAs.

I know what you are thinking: “Richard, have you lost your mind? We provided the kids with food, shelter, education (and running shoes), and now you want us to transfer money into our children’s TFSAs?”

Yes. That is exactly what I am suggesting…

Transfer money to your kids’ TFSAs!

Why does the plan makes sense?

By transferring money to our children’s TFSAs, we receive the following benefits:

1. It provides an opportunity to begin a conversation with our children about money and share our money lessons.
2. It allows us to witness, while we’re alive, how our kids handle money and offers a glimpse of how they may handle their inheritance.
3. By opening up additional TFSAs, parents multiply the TFSA contribution limits (one for each child and/or in-law) and possibly increase the family’s net worth.
4. TFSAs are “too good to pass up” and may not be available forever, so use them or possibly lose them.

How can the Dri Financial Group help you?

Introduce us to your children, and we will offer them the following services:

1. We will remove our minimum investment balance, so children can open a TFSA with any amount of money.

2. We will charge your children the same Wealth Management fee we charge Mom and Dad, regardless of how much they invest.

3. We will provide your children with a financial plan that includes a review of:

• Their employer health benefits and savings plans
• Tax minimization strategies
• Debt reduction strategies
• Methods of savings for educational expenses
• Their life and disability insurance coverage
• Their wills and powers of attorney

4. We will start family financial planning discussions to ensure a successful transition from one generation to the next.

I hope this blog helps you get conversations with your children started and helps them learn about managing money.

If you have questions or would like to discuss opening a TFSA for your children or grandchildren, please call our office for an appointment.

Never Retire Profile

Maye Musk

As the CEO of Tesla and SpaceX, promoter of cryptocurrency Dogecoin, and one of the wealthiest people in the world, everyone has heard of Elon Musk. But what about Maye Musk? The 73-year-old Canadian-South African model and dietician is mother to three Musks: Elon, Kimbal and Tosca. The senior Musk was born in Regina, Saskatchewan, raised mainly in South Africa, and graduated from the University of Toronto with a master’s degree in nutritional science. Musk has been modelling for 50 years, appearing in Revlon ads and even a Beyoncé video, and in September 2017 became CoverGirl’s oldest spokesmodel at 69. In 2021, she was signed by Creative Artists Agency, and even more recently, she appeared on Saturday Night Live alongside Elon. Whatever your thoughts about the Musks, they are without a doubt an industrious family.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier.

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We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
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