Financial and Tax Matters

Talking About Finances

Posted by on Apr 14, 2013 in Financial and Tax Matters, Power of Attorney |

Many families experience problems with financial discussions – and therefore avoid them. The older generation may avoid discussions with adult children out of fear of losing privacy and control. Adult children may wish to respect a parent’s privacy but they wonder – not only about a parent’s well-being, but also whether a parent’s finances could affect their own retirement plans. In other families, money is a taboo subject or one that simply brings up too many negative emotions.  Why do adult children need to talk about money with their aging parents? First, knowing a parent’s situation can help adult children plan their own financial future. Second, being aware is especially important if an adult child has been appointed financial power of attorney for their parent. Third, a trusted adult child can stay alert and offer support when an older person’s health issues make dealing with finances more demanding.  As we get older, dealing with chronic health problems, pain, medication side effects, and vision loss are among our physical challenges. There are mental and emotional challenges, too. They can include increased anxiety and depression, as well life changes, such as losing a spouse (who may have been responsible for finances). All these factors can make dealing with money matters more challenging.   Here are some early signs that finances are getting more challenging, either for loved ones or for ourselves:   Trouble balancing bank statements Unpaid bills, notices or statements stacking up Penalties for late payment or services and utilities being cut off Trouble reading fine print or understanding financial notices More stress about paying bills and looking after finances Changed spending patterns or behaviour So where can we start if we have concerns? Here are some strategies for adult children that can help open doors with this sensitive subject.   Assist with minor, routine tasks. For example, suggest automatic debits for recurring bills or help introduce someone to on-line banking. This can give you some insight into someone’s finances. Once bigger issues or tasks arise later, working in tandem won’t seem such a drastic change.   Ask for their insights. If someone seems financially aware and is an active investor, start a conversation about investments to get a sense of their approach. Alternately, set the stage by asking about older persons’ insights from experiences such as the Great Depression or other financial setbacks. In the process, personal values can be uncovered, and that can create greater trust and open doors for deeper discussion.   Ask them to help give you peace of mind. Let your parents know you’ve been concerned and that you would feel better if you knew more about their plans. Point out that you could be the “go to” person who will need information in a crisis. If you have read or know of a case where a family was financially unprepared, sharing their story can provide food for thought.   Once trust is established, ask to participate in financial planning. It’s no secret that investment options today can be complex. Sound financial advice is more important than ever. If your parent uses an advisor, ask if you can come to a meeting with their advisor – as an observer. Notice whether your parents are following along and involved with the conversation. If they don’t have an advisor, encourage them to get appropriate financial advice.   When should we begin? Ideally, start conversations even before you notice warning signs. Because retirement planning and financial planning are closely tied, this is a good trigger event for starting a dialogue. Another milestone may be when parents turn 65 or 70; at...

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Stuck in the Middle: Retirement Planning

Posted by on Apr 9, 2013 in Financial and Tax Matters, Planning |

Originally published at www.theglobeandmail.com on November 5, 2012.   “Many boomers are assisting parents financially or are losing income because of their eldercare obligations,” says Mara Osis, founder of ElderWise, an organization that provides information and coaching to help families caring for elderly loved ones. “They may turn down career opportunities or even retire early, if they feel it’s up to them to take on this responsibility and don’t see any other way of doing it.” Read the complete article:...

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Avoid Investment Fraudsters

Posted by on Oct 17, 2012 in Financial and Tax Matters |

This guest post is courtesy of the Alberta Securities Commission. Many people approaching – or already in – retirement are looking  to maximize the returns on their savings and investments. Sadly, many fall victim to fraudsters who are skilled at preying on our emotions, insecurities and vulnerability at this critical time. Up to 27% of Canadians have been approached with a possible fraudulent investment. Older persons are targeted for several reasons, but often because they are perceived to have the most disposable income or wealth.   With 4.6% of Canadians investing money in what has turned out to be an investment fraud, one may well wonder: “How can so many people fall for bogus investment schemes? ” Not being clear about our own risk tolerance or investment goals is certainly a factor. Also, successful fraudsters tailor their sales pitch to our “weak spots” and do so in a persuasive and professional-looking manner.     Here’s how investment fraudsters typically use three ways – the Internet, the telephone, and your personal connections – to attempt to separate you from your money:   The Internet and E-Mail   The Internet is a quick and easy way for scam artists to find potential victims. Online fraudsters can operate anonymously from anywhere in the world, making them hard to trace and catch.   Spam emails that reach thousands of people are cheap and simple to create. Online discussion boards and social networking websites, such as Facebook or Meetup, allow people to create groups around investing strategies, or advertise seminars for new investment products. Although some may be legitimate, approach these solicitations with extreme caution.   If you receive an investment solicitation via email, treat it as “spam” and take these steps:   * Do not reply to “spam” emails. Block further emails by adding them to your “blocked senders” list.   * Do not provide ANY personal information unless you have initiated the communication to a company or individual you know and trust.   * Many investing websites look legitimate, but watch out for non-relevant information or spelling and grammatical errors on the site. These red flags are signals to do more research; it could be a scam.   Cold calls   Phone calls are among the most common ways to inform people of investment opportunities. “Cold calls” can be valid ways for businesses or charities to identify and market to potential clients. However, these calls may come from a makeshift office or “boiler room,” promoting a business idea that sounds very profitable – a “sure thing”. These callers may falsify information, try to pressure you into a bad investment, or attempt to outright defraud you.   If you have “call display” on your phone, you can choose to ignore all calls when you don’t recognize a number. If you do choose to answer, protect yourself with these tips:   * Be wary of an investment opportunity that seems “too good to pass up”. Don’t feel pressure to make any decision on the spot.   * Don’t let someone persuade you to invest in an opportunity that isn’t right for your risk profile or time horizon.   * For peace of mind, do your own research about the company or individual offering the investment. Discuss it with your own accountant and financial adviser.   Through friends and family   Scam artists often will take advantage of common bonds developed throughreligious, professional or ethnic relationships or the close ties of family and friendship. This is also called “affinity fraud”. Fraudsters take advantage of the intrinsic trust within a group by first befriending a respected or influential member. This person then unknowingly assists the fraudster by sharing the investment “success” they’ve had with others.   Because of the group leader’s credibility, many others may decide to invest in a potential scam. This type of...

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Tax Breaks for You and Your Caregivers

Posted by on Apr 3, 2012 in Financial and Tax Matters |

With many Canadians caring for aging parents or receiving care ourselves, it’s good to know that there may be federal and provincial tax breaks available to us: Below are excerpts from the Canada Revenue Agency (CRA) website, http://www.cra-arc.gc.ca, detailing three of the available federal benefits. Click on the links below for more information, and note that these benefits apply not just to the elderly, but to any qualified care recipients over the age of 18, such as adult children. Caregiver Tax Credit You may be eligible for this tax credit if you meet ALL of the following conditions: • You maintained a dwelling where you and a dependant lived at any time during the calendar year. • Your dependant is: * your or your spouse’s or common-law partner’s child or grandchild; or *your or your spouse’s or common-law partner’s brother, sister, nephew, niece, uncle, aunt, parent, or grandparent who was resident in Canada. • This person was not only visiting you. • Your dependant meets all of the following conditions: * 18 years of age or older at the time he or she lived with you; * Net income in 2011 (line 236 of his or her return, or the amount that it would be if he or she filed a return) of less than $18,906; and * Dependent on you due to an impairment in physical or mental functions or, if he or she is your or your spouse’s or common-law partner’s parent or grandparent, born in 1946 or earlier. • You did not have to make child support payments for this dependant. • No one other than you claims an amount for an eligible dependant (line 305) for that dependant. Disability tax credit As per the Canada Revenue Agency website, claimants for the disability tax credit (DTC), must meet the three following conditions: • The claimant must have an impairment that is prolonged, which means it has lasted or is expected to last for a continuous period of at least 12 months. • The claimant’s impairment in physical or mental functions must be severe and it must restrict him or her all or substantially all of the time. • The claimant’s severe and prolonged impairment must be certified using Form T2201, Disability Tax Credit Certificate, by a qualified practitioner. If your dependant is able to claim the disability amount, and does not need to claim all or part of that amount on their tax return, they may be able to transfer all or part of this amount to you. Click here for a list of “impairments” that qualify for the Disability Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/qlfd-prcts/dtrmnng/menu-eng.html Finally, if you pay for someone’s nursing home fees, you may be able to claim them under “medical expenses for other eligible dependents –line 331”. Provincial Tax Credits It’s worthwhile to check whether your provincial government offers caregiver tax relief as well. You can start by searching online for “caregiver tax credit” together with the name of your province. Need assistance with your CRA returns? Consult a tax professional or click on the link to our previous article to learn more about help available for older persons with preparing tax returns....

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Hope, Promises & Reality: Eldercare Costs (Part 2)

Posted by on May 24, 2011 in Financial and Tax Matters, Planning |

  In Part 1 of this article, we looked at the costs of home adaptation and the options for in-home care assistance for the elder Olivers. Part 2 examines mobility – both in the home, through assistive devices, and transportation options for seniors – as well as a few important tax considerations.   Assistive Devices/Aids for Daily Living   Brian Oliver reads off for his brother a price list of common devices that help frail seniors stay safely in their own homes: “Stair-lift, $3,000; walker, $350; custom wheelchair, $400; adjustable bed, $1,500 – are you kidding?”   Before hitting the panic button, here’s what Brian needs to do: A safety and accessibility audit can determine what’s specifically needed; your provincial society of occupational therapists (in Ontario, www.osot.on.ca) can provide a list of visiting therapists. Check whether your parent’s extended health benefits include coverage for medically necessary assistive devices and care, that aren’t provided by government programs. These may include purchase or rental of ‘durable medical equipment’ such as (non-electric) hospital beds, wheelchair, walker, crutches, canes; ambulance services, physiotherapy and paramedical services such as chiropractor or podiatrist; medical supplies; hearing and vision aids. Your provincial government may offer an assistive devices program that rebates part of the purchase price of eligible devices; in Ontario, consult www.health.gov.on.ca, or search “aids to daily living” for your province. Visit www.marchofdimes.ca to learn about their assistive devices program for manual & power wheelchairs, scooters, home and bath and personal aids, seating and walking aids, lifting equipment, threshold ramps and some repairs. Tax Considerations   Learn which of your parent’s essential medical services, care, equipment and even transportation may be tax-deductible.   If your parent is classified as disabled via the Canada Revenue Agency’s form T2201, Disability Tax Credit Certificate, they may claim a credit on their annual tax return. The form is completed by a physician or other healthcare professional, and certifies that the care recipient needs assistance to carry out the activities of daily living – such as bathing, eating, and ambulation.   Annual medical expenses must exceed 3% of net income or $1,813 to qualify for the credit. Check the Canada Revenue Agency’s website www.cra-arc.gc.ca and your tax professional for more information.   Transportation Options With the diagnosis of dementia, Mr. Oliver will no longer be driving. Patience, tact, and discussing options may help him cope with this loss. When so many financial pressures loom, a good exercise can be to look at the costs vs. benefits of car ownership.   Mr. Oliver paid $25,000 seven years ago, and only drove the car locally. With $1,000 per year to insure and $100 per month for gas, it has cost $40,400, or $5,700 per year to run. This annual amount could easily cover local transportation by taxi. Opening an account with a taxi company, with a monthly statement paid by credit card, is a convenient option that also allows easy tracking of expenses.   Other options include subsidized transit services such as Wheeltrans, and non-emergency ambulance and wheelchair transit fleets. Volunteer drivers are available for many community services, including day programs and congregate dining (eligibility criteria may apply).   Many medical and personal services (such as lab tests, physiotherapy and foot care) can also be delivered in the home.   So where does this leave the Olivers? They have tallied the potential expenses for home modification, in-home care assistance, assistive devices and transportation. They are learning about the many seniors’ benefits available from governments and community services.   Will they balance the budget? Can Brian and his brother keep their promise to Mom and Dad? It’s...

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Hope, Promises & Reality: Eldercare Costs (Part 1)

Posted by on Apr 24, 2011 in Financial and Tax Matters, Planning |

Snapping his laptop shut, Brian Oliver looks at his brother. Mom’s recent fall has brought them both back to the family home for the first time in two years and they’re dismayed at what they see.   “No matter what I do, it doesn’t balance. We promised Mom and Dad they could stay at home but the money just isn’t there. Maybe you can kick in $1,000 a month, but I’ve got two kids in university”!   Here is the brothers’ worry list:   Mom has advancing osteoarthritis and Dad is showing signs of dementia. Their 1960’s suburban split level has at least four stairs to access either the bathroom, bedroom, kitchen or front door; a long driveway; huge lawn; and backyard pool.   Mom hasn’t been out of the house all winter; the house needs repair and the pool and yard are badly neglected. Dad’s seven-year-old car has expired plates and he can’t find the ownership or insurance. The pantry is full of canned food and there are mystery items in the freezer.   It’s pretty clear Dad hasn’t had a bath since a recent slip in the tub. Laundry is abandoned since Mom fell en route to the basement with an overflowing hamper.   Things have to change, and money will be required, but where to start?   Here’s what the family has to consider BEFORE getting estimates for home renovations and engaging help for homemaking and care:   Home Modification:   Any changes to the home must be guided by the strategy for accessibility and care. If the Olivers are determined to stay at home, what sort of care do they require now, and in the future, and how does that affect the home?   Modifications are urgently needed to allow both parents to easily walk – and eventually, to use a walker or wheelchair – around their home. They must be able to access the ‘golden triangle’ of bedroom, bathroom and kitchen. That may require ramping, stair lifts, or placing the bedroom, and possibly the laundry room, on the same level as the bathroom and kitchen. Finally, Mom must be able to easily reach the front door to access transportation and the outdoors.     Any renovations should incorporate grab bars, roll-in showers and non-slip flooring. Bedrooms need doorways wide enough for a wheelchair, with low-pile carpet or hardwood flooring. Improved lighting is needed inside and outside the house. Energy-efficiency upgrades to furnace, air conditioning, plumbing and electrical can add longer-term cost savings.   If they plan to stay longer-term, the family must consider what level of care they will need. If they opt for live-in care, how will they provide suitable accommodation? Even basic personal care assistance will require a shower stall or a tub with a hand-held shower attachment, grab bar and bath bench.   Sounds like a big ticket – and it is. However, these are viable capital improvements which will affect the home’s resale value. But where will the cash come from?   Research what’s available from Canada Mortgage and Housing’s Programs and Financial Assistance at www.cmhc-schl.gc.ca. National Resources Canada’s Office of Energy Efficiency offers grants for homeowners upgrading to more energy-efficient solutions at www.oee.nrcan.gc.ca. The March of Dimes’ home modification program offers a lifetime maximum of $15,000 for qualified applicants. See www.marchofdimes.ca   Other options to investigate include a reverse mortgage to access home equity for upgrades. Assistance in municipal taxes may be available through the local revenue services department.     Homemaking and Personal Care:   Personal care and nutrition are the cornerstones of staying home and staying well. The Olivers have been...

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