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Money Talk 101 (Ontario)

So you decide, eventually, to be responsible and worry about money (or lack thereof). It’s a dry topic, but one day you’ll get an AHA! moment and realize you’re head has been buried in the sand for way too long.

You should know that all your income is taxed, and if you can find a way to lower your taxable income (legally) then you will end up paying less taxes and still making the same amount of money. Here are a few things to think about as you try to get your money under control, and remember early is better but it’s never too late.

Tax Reduction Options

In Canada (Ontario), there are plenty of tools to work with – here are a few ideas that can help lower your taxable income:

  1. TFSA – This is money from your income (already taxed) but the interest is nontaxable
  2. RRSP – This gets removed from our taxable income and you can be in a lower tax bracket paying less taxes (but when you use it upon retiring it will be claimed as income then)
  3. RESP – This gets removed from our taxable income and you can be in a lower tax bracket paying less taxes government may make payments depending on your contribution – becomes taxable when used for Education purposes)

Life Insurance

Insurance for you, your spouse and even your kids is important. So the sooner the better, and you probably got told this many times but until you have kids you didn’t really care. You could be paying the price for starting late but the longer you wait the worse it gets. Invest in a life insurance plan that includes disability coverage and one that’s also an investment, so the money you put in actually goes into investments and in a few years you can choose to take withdraw it back with the profit (which is taxable) or keep it as an ongoing insurance policy.

Some also get salary coverage (if you loose your job and income due to a disability, but the instalments get way steeper and you still have the option of withdrawing the investment amount whenever you want. Look at the whole package you’re signing up to.

Even for kids, the sooner the cheaper. Get each of them a life insurance plan if you can. This is not a way to cash in on misfortune, but think of it as an investment for their future selves. When they grow up and have kids, to have already contributed and covered until their old age, easing their burden is priceless. It is can cost a 100 dollars a month for 20 years. Once they reach a certain age (say 18), they can make their own contributions.

Investment Property Sale

Also worth thinking about, if you have more than one property, this little tidbit. If you have a rental property that is not your main residence and decide to sell it, the government can take up to 50% of its value in fees and taxes. Before you sell, you make it your prime residence and then sell it to avoid this. Does not matter if you put it in your spouse’s name or not you are both treated as one. Alternatively, you can put it in another persons’ name, but that is also considered a sale when you transfer and you’ll pay the government’s horrific fee. So watch out, or plan to live in it for a few months before you sell it.

Last Will and Personal Directive

Last advice worth sharing is that a Will is the most important thing you can do, whether you have kids, on your own, just married. It keeps changing as your life, your money and your debts change. But make one. This is the most important thing you can make, there are plenty of free kits and cheap ones that you can use that suite the jurisdiction you’re on, as well as software and apps that can manage it, Time Secured App is one terrific tool to help with that.

Otherwise, it will take a long time to make your money accessible to the people that need it, and they will be forced to pay your crazy debts. It will also help with kid guardianship and include assets that you have which people who will have to deal with it on your death may not know about.

Equally important is a Personal Directive will, which is used when you have a big accident and you end up in a coma or life support. It says whether you want to stay on life support or unplug, where you want to donate your organs or not, etc. It gives people permission to make those decisions when you are unconscious saving them a lot of confusion, headaches, heartaches, and potentially costs. These two you need to do ASAP –and are a definite must.

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New legislation: Electronic wills in British Columbia (BC)

While will writing is not the kind of conversation you would like to have across the dinner table, it is a crucial subject for individuals and families. Failure to write a will could lead to an array of complications and expenses with a process that may drag on for some time. We know that many people prefer their will to remain private before their passing, which can help avoid friction, arguments, and even legal action. 

Before taking a look at the changes in legislation, let’s first go through some information about wills in general.

Do you need a will in British Columbia?

If you die without a will in BC, this is described as having died intestate and means the courts will decide how your assets are distributed. In line with provincial laws, an executor will be appointed to review your family situation and propose how your assets will be split. The hierarchical family tree tends to be:-

  • Partners
  • Children
  • Parents
  • Siblings
  • Nieces and nephews

This legal process is unlikely to consider any fractured family relationships. Consequently, your assets may not be distributed as you would have preferred. By writing a will, you can specify how your assets will be split.

Writing a will in BC

The cost of writing a will in British Columbia will vary depending on your route. If you decide to use the services of a solicitor, there are various charges to consider, including:-

  • Consultation
  • Preparing the will
  • Storing your will
  • Executing your will on death

Even though using a solicitor is the more traditional method, many people are unaware that you can write your own will. Again there are specific issues to consider, such as:-

  • Ensure the will is valid from a legal point of view
  • Advice on completing the will
  • Storing your will
  • Execution on your death

While a do-it-yourself will is significantly cheaper than a solicitor, many people prefer to involve the legal profession to ensure their will is legal.

Where to store a will BC

Those looking to store a will in British Columbia have several historical options and one recent change to will writing regulations. It is a problematic quandary; where can I store my will for safekeeping?

Store a will with a solicitor

Even though it is perfectly possible to write your own will with legal standing using online services, many still prefer to use a solicitor. Consequently, the vast majority of wills today are retained with a solicitor until the person’s death.

Store a will at home

There is always the option to store your will at home in BC, but this option has obvious risks. The document may be lost or destroyed in the event of a fire, for example. This would lead to your estate being distributed as having died intestate. Many people have a safe in their home, which has obvious benefits but only if people know the documents are there.

Store a will with a friend

Whether an executor or a friend, it may be an option to store your will with a third party that may have safer storage facilities. However, this option has obvious risks if your relationship breaks down, they lose your documents, or nobody knows where they are on your death.

Store a will with your bank

Some banks and other financial institutions offer storage facilities to their customers. It may be that you choose to store your will with a British Columbia bank with instructions left in the event of your demise. Where there is only one original hard copy of your will, there is always a risk that it may be lost or destroyed.

Store a will electronically

Under recently updated BC laws, you can now create an electronic will with an electronic signature, which can be stored in the clouds. Whether or not you prefer to retain a hard copy in a safe place is up to you, but electronic wills are accepted in British Columbia from a legal perspective. Furthermore, as you can literally store your will as a locked file, only available to certain people in the event of your death, it has opened up new opportunities with cloud storage services.

Using a will registry in British Columbia

Many people use the services of provincial will registries, which allow you to store details of your will where they can be located on your passing. Seen by many as a backup service, this is another way to ensure that legally binding documents will be available on your death.

Electronic wills in British Columbia

Like many provinces across Canada, BC authorities were forced to bring in an array of new regulations due to Covid-19. Some of these changes legalized the creation and witnessing of electronic documents, including wills. Even though many assumed this would be temporary, these changes have been written into BC law in relation to wills, estates and trusts.

What is an electronic will BC?

Under the new regulations, an electronic will is defined as in a form which can be:-

  • Recorded or stored electronically
  • Read by a person
  • Reproduced in visible form

As part of the regulation change, it is now possible for the two witnesses to sign “in each other’s electronic presence”. This means that the witnesses sign the document simultaneously, even if they are not physically together. It is important to note that one of the witnesses should be a lawyer/notary public, and the document must be signed and witnessed in accordance with the regulations.

Altering and revoking electronic wills

Now we come onto the subject of altering and revoking electronic wills, which can be done in several ways:-

  • Deleting an electronic version of the will with the intention of repealing it
  • Destroying a paper copy of the will, with witnesses present, with the intention to delete the electronic copy
  • Replace the electronic will with an up-to-date document
  • Signed declaration from the will-maker revoking all or part of the electronic will

It is now as easy to create, edit, and destroy an electronic will as it is a paper copy. The fact that you can also store electronic wills in the cloud brings us onto the service we offer here at Time Secured.

Is it time to visit your will arrangements?

While many people are perfectly able to create their wills and arrange storage, it is not always that easy to ensure your instructions are honored upon your death. However, we can store your electronic will in the clouds using the Time Secured service. Then, using a regular check in system, we will be able to confirm that you are still alive. Finally, all of your electronic documents will be sent to the relevant parties on your passing. This will ensure that your instructions are carried out to the letter, as swiftly as possible.

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