Wills & Estate Planning

By Klayman & Company 09 Dec, 2016

Most people have life insurance to protect their families if they die, however a valid well planned will can protect your loved ones just as much. Unfortunately most people do not have well planned wills. Please see the discussions below for assistance in planning your estate.

If you are ever in a position that you are not able to act for yourself having a Power of Attorney may save you and your family from further hardship.

The Ontario Government provides a detailed explanation of the Power of Attorney process. They have included both the Continuing Power of Attorney for Property and Personal Care.

We recommend that you review the attached information carefully prior to completing the forms that are included. We recommend that you obtain legal advice prior to signing these forms.

By Klayman & Company 09 Dec, 2016
A Will is one of the most critical – but often neglected – parts of a sound financial plan. What’s surprising is that the rewards from preparing a will are many, and tremendously valuable. So why do so many of us put it off?

For many people, the stumbling block is a number of simple, understandable, but faulty and potentially costly assumptions. While it may seem that common sense would dictate where your assets go or who will take care of your children in the absence of a will, it doesn’t work that way.

Why a Will?

Making a will can be rewarding on many fronts. Here are some of the big benefits:

  • It makes things easier on your family and friends.
  • You’ll leave your family with more money.
  • Your cottage, keepsakes, and collectibles stay in the family.
  • You can help your children have a more fulfilling life.
  • Common misconceptions about dying without a Will.
  • It makes things easier on your family and friends

A will means the details of your estate can be worked out quickly and easily. Without a will, the province appoints an administrator. In addition to extra layers of bureaucratic red tape, this can also result in more of your estate going towards fees.

You’ll leave your family with more money

A properly prepared will can significantly reduce the taxes payable out of your estate. You can also ensure your family members get what they need to live comfortably, which may not happen without a will.

The relatively small amount of time and money you need to invest in preparing a will will pay off several times over in more money for your family, friends, or favourite charities.

Your cottage, keepsakes, and collectibles stay in the family

Without a will, the person charged with winding up your finances may be required to sell all of your assets and turn them into cash. A will helps you protect items of family or sentimental value from being sold.

You can help your children have a fulfilling life

Making a will may be one of the most important things you’ll ever do for your children. A will is the only way you can have a say in who will take care of and raise your children if you and your spouse both die. A will also let’s you take care of their future financial needs, and even provide for their education. Do you want to ensure your children continue to grow and thrive in a warm, caring environment if you and your spouse both die? Get a will!

Why do so many of us put it off?

For many people, the stumbling block is a number of simple, understandable, but faulty and potentially costly assumptions.

While it may seem that common sense would dictate where your assets go or who will take care of your children in the absence of a will, it doesn’t work that way. Just take a look at some of these common misconceptions about what happens if you die without a Will.

You can ensure your wishes are carried out, and your family is left in the best financial and emotional circumstances possible by drawing up a proper Will.
By Klayman & Company 09 Dec, 2016
1. Itemize Your Assets

Although you do not need an inventory of everything you own, it’s helpful to list assets such as your home, cottage, rental properties, business interests, life insurance, and registered savings plans such as RRSPs or RRIFs. You will also need to list special or sentimental items, such as a stamp collection or your grandfather’s gold watch. It is very important that you identify where everything is, remember you may know about that bank account around the corner from your house or the savings bonds in the bottom drawer, however your executor will not. Remember to provide password to accounts, documents or computers your executor might need.


2. Estimate the potential size of your estate

Try to get an idea of just how much you’re dealing with. This is especially important if you want to leave specific sums to different people or groups. It’s also important to help ensure you have enough to see your wishes carried out. For instance, if you want your children to be able to keep the family cottage, you should make sure there is enough money available for the taxes your children will have to pay on its appreciated value.
 

3. Consider your beneficiaries

Make a list of all those who you would like to provide for in your Will. Friends, distant relatives, organizations, and charities may all play important roles in your life. You can lay out specific instructions about the money or property you would like to leave them.

Make a note of any special requirements, or any conditions you’d like to attach.

4. Distributing your assets: Deciding who gets what

This may seem like the simplest step, but a word of advice: Don’t rush through it!

You need to take a little time to think through many different scenarios. For example, say you want to leave a portion to a sibling. You’ll need to come up with a back-up plan in case they should die before you. Here are some other possibilities you’ll need to consider:
If you have children from a previous marriage, will they be provided for if you leave everything to your current spouse?
What will happen to your children’s inheritance if your spouse remarries?
Who should receive your assets if your children die before you and your spouse?
What if your children divorce? You may want to include a special clause to prevent their former spouse(s) from claiming a share of the income earned on their inheritance.
If you are married, sit down with your spouse and discuss how you want your assets to be managed and distributed. You may decide to leave everything to each other, but you also need to discuss what you want done if you both die at the same time.
Spend some time considering who will get your various personal effects and possessions. You can and should decide who should get everything from the family photo albums to that favourite sketch. Without some forethought, disputes can easily arise over sentimental items of no monetary value, even if you’ve fairly divvied up your assets on a financial basis.
Finally, consider whether or not your family will be able to properly manage money or assets you leave them. If you have concerns, consider using a trust company to administer part or all of your estate on behalf of some or all of your heirs. Having a trust means you hand over money to someone such as an advisor or trust company. They in turn take care of that money – managing it, investing it, distributing it and so on – for the benefit of the people you name.
5. Go over the registration and official ownership of your assets

If you intend to leave property such as a house or cottage, make sure you own it outright and not jointly. Jointly-held property automatically goes to the surviving partner when you die. Check whom you have named as beneficiary of your RRSP, RRIF and life insurance policies. Your advisor may have a summary of all these important details.

6. Decide who will care for your children

Select who you want to be responsible for raising your children should you die (their legal guardian or in Quebec, tutor).

Don’t automatically pick your own parents, or the children’s favourite uncle. Consider any potential guardian’s age, their own children, professional responsibilities, location, and their state of health.
Discuss your wishes with your top candidate and be sure they are willing to accept the responsibility before including them in your Will. Obtain their full address and full legal name.
Name a back up in case your first choices can’t – or won’t – take on the responsibility if and when the time comes.
7. Minimize Your Estate’s Tax Bill

Ensure you have arranged your affairs to keep income taxes and probate fees to a minimum; for example, name your spouse as beneficiary of your RRSP or RRIF to take advantage of the tax-deferred rollover. Determine whether you will have enough cash in your estate to pay your final tax bill – which could be much larger than you think – or if assets will have to be sold to pay the taxes.

If your estate is large or complicated – or if you have a family business – it’s generally wise to seek professional help.

8. Decide who will wind up your affairs

When you die, there is a great deal of work to be done. Someone needs to deal with CRA (Canada Revenue Agency) distribute your assets, settle with creditors, and ensure any remaining family are cared for. The person or company you choose to handle these tasks is generally known as your executor.

Give careful consideration to choosing your executor. Ideally, the person will be trustworthy, have good business sense, be able to handle the paperwork, and be living nearby.
Choose an alternative executor in case the first one cannot do the job.
If you choose a family member or friend, be sure to ask if they would be able and willing to take on the job. It can be very time consuming and typically involves a lot of paperwork. Some people may not have the time or inclination.
You can choose a professional or a company such as a trust company to serve as your executor.
You can have the executor’s tasks shared between different individuals or organizations. For instance, if your first pick is a family member, and your estate is substantial, you may want to appoint a trust company as co-executor. The family member will be knowledgeable about your personal and financial situation, while the trust company will be up-to-date on the latest legal and tax rules.
Remember to discuss fees. An executor, whether a friend or a professional may be entitled to be paid a fee for acting as your executor. If your will does not consider fees, then the trustee may use tariffs set by the courts, these amounts can be substantial.
9. Revise your plan

At this stage, take a little time to look over your decisions. Family dynamics need to be considered. For example, you may decide gifting assets away while you are alive may suit you better.

It’s also important to get your lawyer’s perspective at this point. Because your Will may be the most important legal document you’ll ever sign, you will likely want to have it drawn up properly by a lawyer. Incorporate your lawyer’s suggestions, revisit your choices, and finalize your decisions.

It’s also important to get your accountant’s advice. Your Will will have very significant income implications to both your estate and your beneficaries. Generally your lawyer will not deal with income tax issues.

10. Complete your Will and finalize your arrangements

The legal fees to draft a legal Will, can run anywhere from a few hundred dollars to around $2,000. The final bill will depend on the complexity of your situation, and how much work you’ve done ahead of time. You’ll save money and time spent with your lawyer – and help ensure your Will is complete – by doing the preparation we suggest here.

Be sure to arrive with all the appropriate information you’ll need when you meet with your lawyer.
By Klayman & Company 28 Nov, 2016

Even though penny-pinching is harder to do today without any pennies, the concept remains valid and is especially applicable to the expenses incurred by small businesses. Here are a few ideas to improve the bottom line.

Outsource

Employees require salaries and benefits as well as insurance, office space and equipment. Contracting out office tasks transfers these costs to a highly competitive third party and frees up your own premises for revenue-producing uses.

Negotiate with Suppliers

Contact your suppliers and see whether you can get a better deal. Far too often suppliers mechanically increase prices without recognizing the value of a long-term, reliable client. Why should rewards and discounts go to new clients while long-standing customers like yourself see costs go up? Call and make your pitch.

Use the Cloud

Using the Internet to send invoices and make and receive payments saves the cost of cheques, envelopes, letterhead and postage as well as the related labour. Further, cloud-based solutions for almost every manufacturing or accounting need are available for a reasonable “lease” rate. Such an approach reduces the cost of buying and installing software and assures you your cloud services will always have the latest updates.

Consider In-House Printers

Many businesses still need to print data to hard copy. Consider purchasing a laser or inkjet colour printer. Once templates for invoices, letterhead, or business cards have been installed, they can be printed as needed, thus eliminating large inventories of pre-printed forms. The templates can be adjusted for format changes or for staff and address changes.

Face-to-face meetings are not always necessary.

Meet with Telecommuting

For most business communication, a face-to-face meeting is not necessary. Virtual meetings will work if the number of participants is small, the meeting is kept short, and the agenda well planned. Establishing timelines, requesting daily updates and having access to work-in-process by the use of shared cloud facilities will ensure projects stay on time and on budget.

Maintenance

How often are the premises cleaned? Perhaps reducing the frequency of cleaning or having staff empty their own waste baskets at the end of the day are options that will reduce costs without impacting the tidiness of the office.

Go Paperless

Going paperless can be difficult for older employees used to paper trails. Paperless offices must establish a filing system suitable to everyone; this includes scanning every piece of paper that comes into the system and allocating it to the appropriate folder. Going paperless also means reviewing existing client files and purging data no longer required for taxation, legal or business purposes. This is the time to adopt standard records management practices for preserving, storing (onsite and offsite) and destroying documents. Scanning documents saves the cost of renting physical storage space, using employee time to file paper, and ultimately shredding and disposing of that paper.

Review the Cost of Your Premises

Signing a long-term lease may lock your business into a lease cost that will not be acceptable in the future. Look ahead and determine how your business will evolve over the next five years. If your strategic plan includes increasing or decreasing your space, consider signing shorter-term leases that allow an exit with, for example, three months’ notice.

If you own your building but no longer need all the space, consider subletting. You might also think of selling or leasing the entire property and moving to a smaller space. Such a move would provide proceeds from the sale of the building or lease income while reducing your own rental costs.

Think about Your Future

Taking an hour or so with your CPA to look at your current business model and associated costs will help you think about changes that will positively impact the bottom line and ensure that your business keeps on going.

By Klayman & Company 30 Sep, 2016

Businesses are already looking toward 2017 and considering what has to be done to keep profits growing. The Canadian economy is expected to grow at only 1.5% according to a prediction by the Conference Board of Canada, which claims that “…there are plenty of headwinds for Canada’s economic growth prospects:

·      Investment in the oil and gas sector is still falling.

·      Non-energy investment is lacklustre, so Canada may soon face lack of capacity in manufacturing.

·      Canadian consumer spending may not improve because incomes aren’t rising sufficiently.

·      Consumers are also stretched thin with debt.

·      Growth prospects for the global economy remain poor.

·      U.S. growth this year is also tepid.”

Preparing for 2017

In a slow-growth environment, the best way to maintain or improve the bottom line is to reduce expenses. Now is the time to look at year-to-date financial figures and establish budget goals for the next fiscal year.

Start with zero-based budgeting.

Consider the Following

Start with zero-based budgeting rather than simply adding a percentage to last year’s expensed figures. Every item of revenue and expense in the general ledger is reviewed and the revenue and expense items are justified with realistic assumptions.

1.     Consider the possibility of having employees work from their homes in order to:

  • reduce the cost of lease space
  • reduce travel allowances or reimbursement costs
  • reduce in-house cost for utilities, telephones, taxes, maintenance, and interest
2.     Review the communications system. Determine whether a separate facsimile line is necessary. Consider using an Internet system that connects to each employee’s smart phone rather than using the traditional land line.
3.     Consider whether the cloud would reduce computer, printing and communication costs and still enable employees to find data from one source.
4.     Purge old documents. Much data older than eight years can be shredded to free up space.
5.     Review the age and condition of your work vehicles. Should you buy a new vehicle or spend money on repairs and maintenance?
6.     Can some vehicles be sold to reduce the cost of insurance, licences, repairs, maintenance and fuel?
7.     Review the budget for snow removal and ground maintenance. Perhaps a flat rate per snow removal would be cheaper than a contract. Could ground maintenance be performed less frequently?
8.     Review electricity consumption. Can work schedules be altered to take advantage of lower, off-peak rates? Is it time to update the lighting systems, both in the warehouse and in the yard, to higher-efficiency lighting?
9.     Consider whether “just in time” delivery is a better way to manage inventory. Delivery “only as needed” reduces the amount of space devoted to storage and frees up working capital by cutting inventory costs.
10. Examine your lines of credit, credit cards, mortgages and loans. Perhaps interest costs can be reduced, advance payments made, and credit cards paid off with lines of credit at lower interest rates.
11. Determine whether it is necessary to maintain all full-time personnel. Could their jobs be done by part-time employees or contract workers?
12. Evaluate employees on performance and return on investment. Give raises simply based on productivity, quality of work, interaction with clients and staff. Have candid interviews with employees to obtain feedback on how they view their performance.
13. Ask all employees how they would improve their expertise to increase productivity or reduce costs.
14. Examine the time taken to collect receivables. If your company is not receiving payment within 30 to 45 days, perhaps it is time to implement a COD policy for late payers. If a large part of a delinquent client’s bill is, for example, machine parts, then perhaps you should have a deposit-for-parts policy in place. Otherwise, your business is acting as a bank for your clients but it is you who is paying your bank or supplier for overdraft or overdue accounts payable.
15. Examine credit card costs. If the cost of collecting credit card payments is excessive, consider switching to a debit card or e-transfer.
16. Going paperless can save funds. Establish a system of filing for incoming email; items received by surface mail should be scanned, filed, and then discarded. Use the Internet to transmit information related to invoices, payroll and payments. Consider e-transfers to clients rather than cheques.
17. Apply the 80/20 rule. Evaluate your customer base and determine the top 20% of your clients. Stratify the remaining 80% and determine which are the most aggravating to deal with. Stop dealing with them and concentrate on the best 20%. Work on improving your relationship with those in the remaining 80% who show promise.

Budget Like a Start-Up

Ensuring a solid continuous bottom line in times of economic uncertainty requires owner-managers to veer away from the traditional budget process. Management must look at all revenue opportunities and expenditures as if their business were still in the start-up phase and justify the figures for the following year on a line-by-line basis. This will give a better understanding of how to build opportunities and reduce costs.

By Klayman & Company 31 Mar, 2016

Canadian business owners do business all over the world. Most enjoy medical coverage from their respective province or territory and may carry additional travel and medical insurance when out of their province of residence.

Just as important as medical coverage, however, is the ability of emergency response teams or a foreign doctor, nurse or medical support worker to know immediately whether you have any special conditions that could determine how you need to be treated.

A MedicAlert bracelet or dog-tag lets first responders know that you have a specific medical condition or a specific allergy even if you are unconscious. (The bracelet/dog-tag can be easily identified by the symbol of a serpent-entwined rod known as the Staff of Asclepius, a Greek god associated with healing. ) The MedicAlert Foundation is a non-profit, charitable, and membership-based organization founded in 1956 in Turlock, California, by Dr. Marion Collins. The Foundation’s mission is to protect and save lives by serving as the global information link between members and emergency responders during medical emergencies and other times of need.

The Bracelet/Dog-Tag

Each MedicAlert bracelet/dog-tag provides first responders with information regarding allergies, implants such as artificial heart valves, medical treatments such as chemotherapy and treatment wishes.

Each bracelet/dog-tag contains the wearer’s unique ID number, medical condition and an emergency toll free number that connects to a live operator 24 hours a day seven days a week. As well, the organization provides a wallet card with emergency contacts and health information.

Worldwide Information Network

In the event of a medical emergency, medical practitioners or first responders can call the emergency number and speak to a live operator who can reference your health records that may include your medical condition, types of medications and dosage, as well as past surgical history. If the emergency requires transfer to a medical facility, MedicAlert will transmit the information to that facility so the information will be available when you arrive. In the event your travel takes you out of country, the MedicAlert Foundation is present in more than 50 countries and translation service is available in over 140 languages.

Low Cost

Firstly, let it be known that it is not possible to obtain a MedicAlert bracelet/dog-tag without becoming a member. Because the bracelet/dog-tag cannot carry all your medical information, you must become a member before the bracelet/dog-tag will be issued.

MedicAlert protection starts at $39.

According to their Canadian website, the cost of the MedicAlert ID starts at $39. (For the fashion conscious, MedicAlert provides a catalogue of specialty wear that resembles jewellery with prices topping out at around $2,700.) On top of the cost of the bracelet/dog-tag, a $24 fee is required to set up your medical profile and ensure the ID bracelet/dog-tag is properly engraved. The coverage after that is $5 per month with small discounts provided for prepayments of 24 or 36 months.

Other services provided by the MedicAlert membership include:

1.    online access to your medical information anywhere 24/7

2.    notification of family members or other named individuals in the event of a mishap

MedicAlert offers an optional service plan that enhances the basic plan with additional personal information that includes for example DNR orders, X-rays, MRIs, or CAT scans. These documents are available to a designated proxy or medical practitioner as needed.

If you are a frequent flyer, an entrepreneur who has previous medical history or have employees who could benefit from wearing a MedicAlert bracelet/dog-tag, perhaps now is a good time to investigate membership. Unfortunately, the cost of membership is not a tax-deductible medical expense and thus, if management determined that membership should be paid by the business, that cost would possibly be considered a taxable benefit.

MedicAlert Reduces Risks

The MedicAlert program is relatively inexpensive when one considers that information provided to first responders or medical practitioners provides knowledge crucial to your well being. That knowledge could reduce the risk of incorrect medical treatment as a result of a wrong diagnosis, may prevent unnecessary medical care, and ultimately just might save your life.

By Klayman & Company 16 Aug, 2017

Because lighting, heating and cooling represent 19%-25% of the cost of operating a commercial business, control of energy costs is essential to improving profit margins. A reduction of even 10% in these costs can produce a significant improvement. But, because Canada is located in a part of the world where temperatures can range from 40C below zero to 35C above, it is inevitably expensive to keep internal temperatures at levels needed to maintain comfortable working conditions through the changing seasons.

By Klayman & Company 16 Aug, 2017

Setting the price point for your product or service is not simply the process of determining the cost of production then adding a mark-up. It is more a matter of understanding the price the consumer will accept as the value of your product or service and keeping the costs of production to a level that will give you a profit at that price.

By Klayman & Company 16 Aug, 2017

The significant rise in the cost of equipment, vehicles, real estate, and inventory has prompted many businesses to increase business debt. Low interest rates, combined with the ability to obtain larger loans with extended payment terms, have allowed businesses to operate in a “business as usual” mode with less consideration for the actual cost of borrowing.

To give some idea of the effect of even low interest rates on an owner-managed business, the following key elements of most businesses have been put forward as an example of the effect of interest costs on a business. The effect of domestic borrowing has been added to show the full impact of current interest rates on the owner-manager. Since lending rates vary widely depending on a variety of factors such as risk, item to be funded and the term, and are usually negotiated, the interest rates used below have been chosen at random from Internet sources; calculations are approximate and for illustrative purposes only . All loans have been made effective June 1, 2017.

  • Commercial mortgage: $600,000 over 25 years at 3%
  • Two work vehicles: $120,000 financed over five years at 6%
  • Equipment loan: $200,000 financed over five years at 5%
  • Operating line of credit: $50,000 at 3% a year
  • Credit card debt: $10,000 at 15% a year on the outstanding balance

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