Tax Free Savings accounts- Are they taxable upon death? Who should I name as a Beneficiary?

 What’s the best option when it comes to naming a spouse as a beneficiary on your (TFSA) Tax Free Savings Account assets?

Should you leave your (TFSA) to your spouse / common-law partner, Children or someone else?

If you name your spouse as a beneficiary on a (TFSA) you have two options:

1) Name your spouse / common-law partner as a successor annuitant

or

2) Name your spouse / common-law partner as a beneficiary.

I know it sounds the same, but there is a subtle difference. In Ontario you’re allowed to name a regular beneficiary and / or a successor annuitant.

Successor Annuitant Designation

If you name your spouse as the successor annuitant, upon your death they become the new holder and the tax-exempt status of the TFSA is maintained. All of this is done without affecting any of their TFSA contribution room this makes it clean, simple, and seamless. Yes, you read that correctly, they can have maxed out their own TFSA and still transfer your entire TFSA to their plan.

Also by naming your spouse as a successor annuitant means that you avoid probate fees since these assets will pass outside your estate and directly to your spouse / common-law partner. This is usually the best option if you have a spouse.

Beneficiary Designation

When you choose to name your spouse as a regular beneficiary it is a little more complicated. The TFSA assets still passes outside your estate to your spouse on a tax-free basis, but things aren’t quite as straightforward.

Your spouse can transfer the TFSA upon death to their own TFSA, as long as this occurs during the ‘rollover period’. This rollover period ends on December 31st the following year. Transfers during this period are ‘exempt ‘ and again will not affect your spouses TFSA contribution room.

Note: the transfer amount can only be equal to the fair market value of your TFSA at the date of your death. This rule also applies when you’re transferring to a Non-Spouse (such as your child or friend). Any growth on the assets after your death will be taxable. To avoid unwanted taxes we suggest to make this transfer as quickly as possible.

When transferred to a spouse they will be required to complete an extra step .They will need to declare the contribution, so it may be exempt eating up their own contribution room. They will need to send the CRA (Canada Revenue Agency) form RC240, Designation of an Exempt Contribution Tax-free Savings Account (TFSA) within 30 days of the contribution to their own TFSA to ensure that the contribution does not affect their own TFSA contribution room.

Designation of a (non-spouse) Beneficiary - Child or friend

The TFSA assets still pass outside your estate to your selected beneficiary on a tax-exempt basis except the same rules apply as above. The growth is taxable, the transfer is not as easy but is simple.

The beneficiary would receive your TFSA in cash. They can then add the money to their existing TFSA, as long as they have the contribution room ( see below for a chart of the limits over the years), or they can open one if they do not already have an existing plan. As mentioned above the rules still states that any growth on the assets after the date of death will be taxable. To avoid unwanted taxes it is always best to make this transaction as quickly as possible to limit as much growth as possible.

So in Summary—What is the best strategy when it comes to selecting your spouse to inherit your TFSA assets?

We suggest you consider designating your spouse as successor annuitant.

If you’re like most people, you may not remember whether you designated a beneficiary or successor annuitant or both when you set up your TFSA originally. If you opened your account back when they started in 2009, you really may not recall.

There’s no harm in double checking with your financial advisor. It’s easy to make any necessary changes if they are needed. If your just getting started, now you know which beneficiary to choose.

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Here is a breakdown of the two designation types in a chart:

Here is a list of Contribution amounts since 2009 (last updated, January 2019)

What’s the easiest way to save for a down payment on a home?

Part Two- How do I save for a down payment on a home?

Here’s my suggestion – What’s your mortgage payment going to be?

Lets’ say it’s 1,7500/month for a 350,000 house.  Start saving that amount every month NOW.  You’ll be able to see if you can really afford the mortgage payment.  You see the bank would love to lend you more money to buy that bigger house because they make more money by doing that. To them it’s just a formula on a paper.   But can you afford it and live in your current comfy way??  Everyone has a different lifestyle however we all know someone who is house poor and that is NO fun at all.  I’ve seen good marriages fail because there was no fun being had due to a huge mortgage payment.  What’s worse it’s over many years – hard to see that light at the end of the tunnel.  What use is that big house if there’s no one to share it with??

If you start saving that monthly mortgage payment now and keep doing it each and every month, with no exceptions (because the bank won’t let you away with not paying it each month). Then in less then 2 years you’ll have a 10% down payment.  Save for just over 3 years and you’ll have a 20% down payment.

 If your income won’t support the whole mortgage payment because you’re currently paying rent then save the difference between what your new mortgage payment would be and what your current rent is.

Using the above example and say your rent is 800/ month..1,750 – 800 = 950.  Pay your rent each month but also save $950 each and every month for your down payment.  You will have close to 5% down in 18 months and in 3 years you’ll have over 10% down. 

Remember you can’t take a month off if you’re going to Cancun because the bank wouldn’t let you away with that.  You can’t let yourself away with that either.

 Smart money means being disciplined even though it’s hard sometimes.

More importantly you’ll know how it feels to be tied into your mortgage payment so you’ll know if your dream home can comfortably fit into your lifestyle plan.

-Jodi

Bonnie-Part of our Team

Famous 5 Foundation

Recently we attended one of Famous 5 Foundations speaker series events sponsored by Enbridge here in Sarnia. We learned all about the foundation and found it quite interesting.

THE FAMOUS 5 FOUNDATION MANIFESTO

We know today’s privileges are the results of yesterday’s efforts, and we want the whole story—
We are curiou5.
We are the new leaders and future leaders, and we’re here to shape our nation—
We are ambitiou5.
We have the spirit of discovery, and the desire to explore our great country and beyond—
We are adventurou5.
We are leaders in science, art, politics, education, healthcare; masters of our crafts—
We are ingeniou5.
We are prepared for acts of high and splendid bravery for progress and equality—
We are courageou5.

We are famou5.

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The Famous 5 Foundation was founded by 5 amazing women.

Emily Murphy- 1868, Cookstown, ON – 1933, Edmonton, AB

A prominent suffragist, reformer and writer, Emily Murphy (born Emily Gowan Ferguson) became the first female magistrate in the British Empire in 1916

Nellie McClung -1868, Frankville, ON – 1931, Claresholm, AB

Louise McKinney (born Louise Crummy) was a lifelong organizer and staunch supporter of the Women's Christian Temperance Union (WCTU).

Henrietta Muir Edwards-1873, Chatsworth, ON – 1951, Victoria, BC

Nellie McClung (born Nellie Letitia Mooney) was a novelist, reformer, journalist, and suffragist. Feisty and charismatic, Nellie had a way of winning over opponents with her wit and humour.

Louise McKinney- 1849, Montreal, QC – 1931, Fort MacLeod, AB

The eldest of the Famous Five, Henrietta Muir Edwards (born Henrietta Louise Muir), was an artist as well as a legal expert.

Irene Parlby-1868, London, England – 1965, Red Deer, AB

An aristocratic English woman who became a Western Canadian farmer’s wife, Irene Parlby (born Mary Irene Marryat) was a firm advocate for rural farm women of Alberta. She organized and became the first President of the United Farm Women’s Association in 1916. 

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There are lots of ways this foundation offers knowledge and encouragement.

1) The Speaker Series

The Famous 5 Foundation chooses speakers to talk about their careers, and the passion, vision and determination that drives them toward their goals.

In relating their lives, women and men will hear about the different challenges as well as triumphs; humorous incidents and stories of loss; humbling moments of reflection and inspiring calls to action.

Watch for this speaker series to start up again next year.

2) Legacy

Through educational curriculum’s and projects, the Legacy Programs work to ensure the story of the Famous Five is told and celebrated. 

3) Future 5

Through skill-building workshops and events, the Future 5 Program helps young girls grow into Canada’s next generation of leaders. 

The speaker we were privileged to watch that day was Jennifer Buchanan. She is just one of the extraordinarily successful women whom they have had present on their stage. Jennifer is a health speaker, health entrepreneur and a certified music therapist. She shared her story along with the struggles she went through as a female entrepreneur starting her own business. She told us about her vision, and the passion she had for it, as well as the fear that sometimes prevents us from moving forward with our dreams. We also learned about the importance music can have on our lives, she shared a short video where we watched how music therapy can be used to help patients with Dementia, as well as its affects for differently abled persons. It was very touching and a great reminder.

Do I Really Need an Emergency Fund?

Part One- FOR ANYONE WITH CREDIT CARD DEBIT

YES, YES, Yes you do!   However, your personal situation will determine how big your emergency fund should be.

The first question you need to ask is do I have debt?  Not mortgage debt or a huge line of credit but the other debt.  The bad debt…you know credit cards, store credit cards, those things with an absurdly high interest rate.  If you have that kind of debt, then you NEED to start an emergency fund right away.

Don’t worry about paying off those credit cards first.  Instead get started right away and save or sell some things to get $1,000 quick. If you can’t save with your current income then you need a side hustle or you need to pick up some extra shifts, maybe work some overtime, is there a bonus coming – use that (you didn’t really need that new furniture or the trip to Mexico).   You see you need to pay off that bad debt soon, but first you need some safety in your life.  You need to get together $1,000 for emergencies and put it either in a cash account (not attached to your debit card) or literally in cash somewhere in your house.  Somewhere where you can’t easily spend it, because needing a pizza on Friday night, is not an emergency.  I’m tired and don’t feel like cooking, is not an emergency! Christmas and birthdays are not emergencies!

Things like a car accident, unexpected home repairs, true sickness, these are emergencies!  You need this emergency account so that when these things pop up – and they will- you are prepared, and you won’t have to go into more credit card debt to get out of them.

Once you have saved up $1,000 (see how easy that was😉) now you can start paying off your credit card debt.  Make a promise to yourself to not put anything else on those cards and pay them off – cut them up if you have no will power.  If you’re using credit cards to supplement your income, just stop.  What you need to do is to rethink your spending and your income- here’s where the B word comes in – BUDGET, because all you’re doing is making your creditors rich.

If you’ve had a true emergency and must dip into your $1,000, stop working on paying off your credit cards until you build this fund back up to $1,000.  Be super disciplined about it because this will give you that peaceful easy feeling that you deserve to feel about your finances.  Once you’ve filled that account back up, start back at knocking off your credit card debt. 

Remember that financial success is hard work and sometimes it’s not fun, however that feeling you’ll get when everything has been taken care of – you can’t beat that!

-Jodi

Great read for anyone!

Michelle- Part of our Team

Discussion in the media of a possible recession

We’ve all heard the recent discussion in the media of a possible recession.  Here’s Dave Ramsey’s take on how that could affect you:

Four Always, Four to Avoid

These are the four best foods to always have on hand and the four worst foods to avoid

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Based on our research with Blue Zones Centenarians, the healthiest, longest-lived people in the world, we created these simple food guidelines to help people live better. Although the blue zones longevity hotspots were in very different parts of the world, they had similar eating patterns and lifestyles.

These are the four best foods to always have on hand and the four worst foods to avoid. The Always Foods are readily available, affordable, taste good, and are versatile to include in most meals. The Avoid Foods are those highly correlated with obesity, heart disease, or cancer, as well as constant temptations in the standard American diet.

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Bonnie

Learning a new skill can help you to relieve your own stress

Wealth means nothing if you’re too stressed to enjoy the lifestyle you’ve dreamt of. Here are some tips for keeping both your mind and body healthy. 

Recently I have learned 2 new tips to help me keep myself more relaxed, less stressed and more focused. The amazing part is I treat myself as needed.

1)  Breathing- I know that we breathe an average of 15 times per minute, and it is something that we don’t even think about. However  in the past year I’ve read about using a breathing technique to help relax your mind to help you fall asleep. I have used it for this purpose and it truly  does work. The technique is known as the 4-7-8 Breathing Exercise. More recently I read the same technique which is explained in detail here is used to diminish stress, help focus and calm your mind. I have currently only tried it a few times to help with focus, but feel better afterwards and will definitely keep this tip front of mind.

2) Tapping- I was skeptical of this method. I know it sounds interesting, and very different. However, during a conference a few weeks ago, Alex, one of the founders of the technique was there to have 7,400 women try this out. Just prior to the start of his talk I had gotten up to go for a walk as my I-T band in my left leg had tightened up and I was feeling discomfort while sitting.

As Alex talked us through the process, explained in detail here. I relaxed, and by the time we were finished, the 7 rounds which took about 7 mins, I felt my I- T band pain was much less. Alex finished his talk and when I got up to go for lunch I no longer felt the pain, it was gone. There is a Free App called “Tapping Solutions”. I downloaded it for free, you can pay a monthly fee for some items listed, I only viewed / used the free samples available.

Once you read the explanation you will see that this is something that you could do anywhere without the App. One suggestion, you may wish to do it in a room alone. If done publicly you could have some questions as to what you are doing. For me, if I really needed to do it and was on a plane, stuck in a window seat, I would, simply because it works and I would rather be asked about it than sit uncomfortably for an entire flight.

Personally, I plan to keep these two techniques as tools to help relax and relieve subtle pain when I can. There is nothing worse then being uncomfortable. Besides you can’t enjoy your dreams if you’re stressed, can’t sleep and aren’t able to focus on the amazing things life has to offer.

I have already shared the breathing technique with my kids 10, and 15. It also has helped them to fall asleep. I will be sharing these as well so they too can keep these handy tips in mind when feel they need them.

-Michelle Currie

IT'S JUST A BOX

Hey There

We love what we do and we love to make the complicated easy to understand.

 I get A LOT of questions regarding types of investment plans.  People will come in to see us for the first time, we will be chatting about things like their investment experience and investments they currently own and inevitable this is how it goes:

They’ll say “I have a RRSP” and I’ll say so what is it invested in and 95% of the time they will say “I don’t know… it’s a RRSP”.

 Here’s the thing… a RRSP is just an investment vehicle/a type of account.  Here’s how I like to describe it:

 I like to say it’s just a box.  Picture types of plans as boxes.  You can have a RRSP (Registered Retirement Savings Plan) box, a RESP (Registered Education Savings Plan) box, a TFSA (Tax Free Savings Account) box etc.

 Any type of investment can go into any of these boxes. 

Let’s take a RRSP as our example:

IT”S JUST A BOX! 😊

As always let us know if you have any questions or I you want to learn more.

Jodi

Yoga as a Remedy for Our Stressed, Sedentary Digital Age

Yoga can help to alleviate the stress, anxiety, and aches and pains that come with the digital age. Here are some yoga moves you can do anywhere, even at work.

Most of us spend the majority of our days on our phones, computers, tablets, and in front of our TVs. We also spend the majority of our days sitting or reclining, whether in our cars, at our desks, or on our couches. Just as humans are not meant to be wired all the time, we are not meant to be sedentary for most of our days. It’s not a coincidence that we are restless, stressed, anxious, and suffer constant back and pains.

Office, Desk, or Cubicle Yoga: 4 Essential Moves to Reverse “Computer Crouch” and “Mouse Arm”

For a typical office job of answering telephones and working at a computer, there are a couple of poses that you should do often.

Every 15 Minutes, Sitting Moves:

1. Elbow Hold:

Put your arms up over your head and hold your opposite elbows. Then move your held elbows in four directions: forward and backwards, from side to side, and in small back and forward bends. Do this for 20-30 seconds every 15 minutes.

2. Arm Twists:

Put your arms straight out to the sides with your thumbs up. Rotate our arms forward and then backwards so your thumbs are moving in a circular motion. Do this 10 times. Then repeat with your arms rotating in opposite directions from each other. Do this 10 times as well.

Every 30 Minutes, Standing Moves:

1.       Baby Backbends: Stand up and clasp your hands behind your back. Arch backwards gently as you open your chest and roll your shoulders back and behind you. Then turn your head side to side, 5 times. Then bend your ear towards your shoulder, 5 times on each side.

2.       Arm Circles: Put your right hand on your right shoulder. Extend your left arm straight out to the side and bend your wrists so your fingers point towards the floor. Move your left arm around in a circle about 5 times each way. Then repeat this on your right side.

Our Summer Hours Have Arrived

Reminder we start our Summer Hours this week.

For the Months of July and August.

They are as follows:

Monday - Thursday 9:00 am to 4:00 pm

Friday's 9:00 am to 2:00 pm

Some important points to remember:

1) If you call on a Friday Afternoon after 2:00pm we will return your call on Monday Morning.

2) As always exceptions will be made. If you need a meeting after hours we will be more than happy to accommodate your request.

Enjoy the awesome summer and be safe!

Going Meatless made Easy

The recently revamped 2019 Canada’s Food Guide recommends this, as well. Two of the main tweaks to the guide includes having lots of fruits and vegetables (think half your plate) and eating plant-based proteins more often than ones derived from animals, such as meat, fish, dairy and eggs.

Why should you reduce your meat consumption? There are plenty of reasons, but let’s start with the health rewards. Research studies show vegetarians generally eat fewer calories and less fat, weigh less and have a lower risk of heart disease than non-vegetarians. So cutting back on your usual meat-heavy diet can have health benefits. A recent review of studies on plant-based diets published in Progress in Cardiovascular Disease, found that the risk of death by cardiovascular disease is reduced by 40 percent, among other heart-healthy benefits. And here’s encouraging news if you feel it’s impossible to give up meat. You don’t have to follow a strict vegetarian or vegan diet in order to benefit from more plant-based meals. A 2018 study conducted at Erasmus University Medical Center in Rotterdam, Netherlands, found a link between plant-based diets and a lowered likelihood of being overweight or obese when you’re middle aged. So swap meat occasionally and you’ll still benefit from eating more plants.

Besides the health benefits of eating more plant-based foods, there’s also the environmental impact of a carnivorous diet. Producing the meat we eat takes a huge toll on the environment because it requires more fertilizer, pesticides, transportation and land to raise the animals. And we haven’t even touched on the greenhouse effects from animals that produce methane gas or fertilizers that release nitrous oxide.  Raising animals to consume is causing an estimated 18 percent of the greenhouse emissions linked to global warming. Growing plants to eat calls for alot less fossil fuel, water and land.

How to Eat Less Meat

One of the easiest ways to ease into eating a more plant-forward diet is to plan for Meatless Monday. It can, of course, be any day of the week (or aim for two days a week!) that you prefer.  The key, I’ve found, is establishing a set routine, so you can easily wrap your head around adopting a new habit. Knowing that every Monday is the day I’ll be eating meatless meals will put me in the right mind frame to plan my grocery shopping and recipes around this schedule. Here’s an added bonus to consuming more plant-based proteins in place of meat; they tend to be less expensive than meat, so you can save money on your grocery bill, too.

5 Delicious Ways to go Meatless

There are plenty of delicious, satisfying recipes to try, and once you discover a few that you enjoy, they can become part of your regular rotation of meatless meals. A few that will not have you missing meat whatsoever:

It’ll be BBQ season soon and these portobello burgers with pesto, provolone and roasted red peppers comes together so quickly. They’re a great option to have on hand at summer parties for the vegans and vegetarians on your guest list, and a simple lunch to whip up for yourself.

I know tofu can be a bit of an acquired taste, but if you’ve only had it prepared in a way that was supposed to mimic, say, a beef burger, then it’s time you tried it as an ingredient in and of itself. This sweet and spicy crispy baked tofu is fantastic as a side dish, but I also like to add them to a rice or quinoa bowl or a salad. It calls for firm or extra-firm tofu, which is often more palatable for people who don’t like the squishy texture of soft tofu.

If you’re an Instant pot devotee, this Instant Pot lentil soup is for you! It comes together in less than 20 minutes and is loaded with a variety of veggies! Plus, lentils are a great source of protein; a half-cup of cooked lentils provides about 12 grams of protein.

Snacks packed with protein can help you feel satisfied and allow you to power through your busy day, without the crash and burn you’ll have after wolfing down a doughnut mid-afternoon. Instead of beef jerky or a boiled egg, some plant-based snack options that are easily portable include edamame (one cup provides 17 grams of protein, plus vitamin K and folate), and apple slices dipped in nut butter, giving you sweetness, fibre and antioxidants from the apple, plus protein and potassium from the nut butter.

If you’re like me, when you think breakfast, you think eggs and bacon. Break out of that habit with some recipes in this round-up of vegan breakfast ideas. The gingerbread waffles and Greek chickpeas on toast sound unusual and flavourful and will be a nice break from the same old classic breakfast.

Bonnie

Mom

There are many different kinds of Moms, all equally as special. Maybe you have fostered or adopted a child, maybe your pets are your children, maybe your a Step-Mom aka bonus Mom, maybe you have just been there for someone and loved them unconditionally. Either way that makes you a Mom in my books.

Mom’s do a lot for their families whether they are blood related or not. Mothers work hard taking care of their loved one(s). If you have lost your mom, I am sorry. Please know she is with you, in your heart and memories forever.

A Mother’s love is unconditional even when you aren’t with them. Even when they are mad at you they still love you. That is something you shouldn’t forget. Never take your mother for granted, because one day she’s gonna be gone and you don’t ever know when. It could be tomorrow, in a couple of days, in a couple of weeks, years, it could even be today. The point is your mother loves you and you should so your love and appreciation for her. It will only takes a couple of minutes to stop what your doing and go tell your mom that you love her. Text her, or call her and tell her.

If you need a reminder of all mom’s do, check out this video also shown below.

Mom:

Here’s a funny reminder of all that moms do:

World's Toughest Job NOTE: MUST WATCH UNTIL THE END

Job Posting: Director of Operations Job Requirements: Excellent Negotiation Interpersonal skills Degree in Medicine, Finance and Culinary Arts Mobility. You must be able to work standing-up most or really all of the time 24 Hours a Day, 7 days a Week, 365 Days

SALARY: NOTHING

Make sure you Thank your Mom and tell her you love her.

Michelle

Changing Career Paths

How Often Do People Change Careers? Experts like to talk about how often people change careers during their lifetimes. This figure usually ranges from between three and seven times. Sometimes the change is by choice, and sometimes there is a factor in place.

When Workopolis recently asked Canadians how many career paths they had followed, just one in four replied “one.” A clear majority had switched directions at some point – whether because they had discovered a new field they felt passionate about, or because they hit roadblocks such as alack of advancement, cutbacks or layoffs

So, if you are contemplating a career change, you’re not alone. And whether a leap into another profession is by choice or necessity, smart financial planning can help protect your household budget and keep you on track towards a comfortable retirement.

-Jodi