How to Manage Your Inheritance

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Canada is on the verge of a colossal transfer of wealth from one generation to the next. Baby Boomers are expected to inherit roughly $750 billion by 2026; the largest shift of wealth in Canadian history according to a CIBC Capital Markets report. Maybe you are one of them.

There are currently more than 2.5 million Canadians over the age of 75—the largest cohort of that age group this country has ever seen. And the CIBC report estimates their total net worth at $900 billion plus. The reality is that many of these individuals will pass away over the next 10 years, either leaving that wealth to a spouse or to their children (most in their 50’s and 60’s).

If you will be one of the beneficiaries of this huge wealth transfer, it’s important that you keep the following thoughts in mind.

The Death of a Loved One is a Very Difficult Time

Try as we might, through planning and conversations, we can never be fully prepared for the death of a loved one. The finality of it all can be very overwhelming. Sometimes it brings out strength, support and loving connection within a family, but unfortunately it can also unleash old resentments or create new disputes. Just as each family member had a unique relationship with the loved one, the feelings that arise from the loss will also be unique.

Do your best to honour your loved one by keeping family interactions positive and constructive.

You’ve Probably Entered Unfamiliar Territory

If you are the executor of the will, you will likely be dealing with people and situations you have never had to deal with before, all while keeping on top of your other life commitments.

As executor you will need to locate the will, gather financial records, contact banks, Canadian Revenue Agency (CRA), insurance companies, and myriad other people and agencies. Be patient with yourself and hire professional help if you feel unable to handle everything on your own.

If you are not the executor, be understanding and helpful to whoever is handling that role. The more supportive everyone is, the smoother the process.

Make the Most of Your Inheritance

Whether your family legacy has been passed down for several generations, or been built by your benefactor, it’s important to recognize the work and care that went into creating your inheritance. Gratitude for the opportunities and security it provides, will no doubt inspire you to want to make the most of this gift.

The best way to do that; is to give yourself time. Time to grieve and time to plan, and when you are ready, here are four things to consider:

1. Create a Solid Foundation for Today

If you have credit card debt, using some of your inheritance to eliminate it, is a smart move. After that, consider paying off other bank loans, car loans, home equity loans and mortgages. Pay off your highest interest debts first.

Being debt free is very empowering. Without the weight of debt and interest payments, you can focus your energy—and money—on your short and long term financial goals.

2. Plan for a Secure Tomorrow

As Canadians live longer, the need for more money in retirement has increased. It may be needed to fund an active lifestyle, or, if health issues arise, it may be required for assisted living expenses. Using part of your inheritance to top up an RSP or TFSA can be very beneficial to your savings, and your peace of mind. It’s smart to get advice from a financial professional—to ensure you make the most of your retirement investments.

And what about your rainy-day fund? Having four to six months of living expenses at hand is a wise practice, but often difficult to achieve. Your inheritance may be the just the opportunity to put it in place.

3. Build a “Launch” Pad for Your Children

Whether it’s an education fund, money in trust for after university, or help buying their first home in an ever upward spiraling housing market; using some of your inheritance to give your kids a leg-up in life can be very gratifying.

4. Think of Your Own Legacy

If you receive a very large inheritance, one large enough to be life changing, then you have a unique opportunity to create a legacy for your own heirs. Or you may wish to leave funds to organizations or charities that are important to you. Having a solid investment plan to grow the estate is important.

A Money Coach Will Help You Plan

While it can be prudent to let your inheritance rest while your emotions are still raw, it’s not wise to let it sit indefinitely. An inheritance is a gift, and a responsibility.

You owe it to yourself, your benefactor and your heirs, to make the most of this legacy.  A Money Coach is an unbiased ally, who will help you make a plan centred on your values and goals, and support you to make informed decisions along the way.

Posted in Ask Your Money Coach, Will & Estate Planning

Aging Parents – Reversing the Roles

by Karin Mizgala MBA, CFP®

I’m not sure when it happened, but several years ago I realized that the tables were turning in my relationship with my parents. Although still extremely healthy and vibrant at the age of 70, my parents were starting to ask me for advice and I could feel a subtle shift in the balance of power.

Most children of aging parents that I know are busy, stressed and ill-equipped to deal with the added time and financial demands of caring for elderly parents. And often the need to step in comes during a crisis. This isn’t a great time to make the emotional, financial and legal decisions that are often necessary.

If possible, have a conversation with your parents early. Find out what they have in mind for their future. It’s vitally important to get a sense of where they stand financially, and to develop an understanding of the role that you and your siblings might be called upon to play. None of this is easy to talk about. You must be sensitive and respect your parents’ need for privacy, dignity and sense of control. I’ve developed an understanding of these challenges first-hand.

My Father passed away a few years ago. But because our family was proactive before and during my Dad’s short illness, we were able to keep him involved in all decisions and maintain open and honest discussions right up until his passing.

Death is, of course, inevitable. During a time of so much pain and emotion, I’ve found the key is to see this time as an opportunity to strengthen relationships with family and friends as much as possible. My Dad was ill, and death was coming at all of us very quickly. But we found strength in family and turned my Father’s death into something that brought all of us closer together.

It isn’t easy to talk about the end of life. But it is somewhat easier, before there is illness, or independence issues. But whenever you have the conversation, ultimately, everyone is likely to feel more at ease when it’s done. Like so much in life, and even death, being proactive and communicating with honesty and transparency makes all the difference in the world.

Here are some simple guidelines to help in developing a care-giving plan of action:

  1. Start your dialogue with parents and siblings as soon as possible – strive for practicality and openness. Remind yourself, and each other, that these issues will eventually have to be faced, and that it is best to be prepared well in advance.
  2. One of the chief objectives of your plan should be to maintain your parents’ self-esteem and a degree of personal independence. Studies have shown that most seniors want to stay in their own homes if possible.
  3. Get informed. Find out what services and assistance is available in your community. Local seniors’ centers can provide a wealth of information and advice.
  4. Get a sense of your parents’ financial capacity and their desires. Do they have enough money to cover medical expenses, the costs of home care or a retirement home? Do they have a retirement community in mind? Would they like to live nearer to you or other family?
  5. Find out where your parents keep financial and legal documents. You don’t need to know all the details unless there’s a crisis, but know how to access the information quickly and easily if something does happen.
  6. Find out if your parents have up to date wills, powers of attorney and health care directives. Gently encourage them to have their legal professional review and update these as needed.
  7. Create a list of names and contact information for your parents’ key professionals such as doctors, lawyers, accountants, brokers, financial planners, bankers, etc.

For most families it can feel awkward, or morbid, for offspring to ask their parents how those assets will be distributed. As a result, people stay silent unfortunately. But that can lead to assumptions or expectations that may turn out to be very wrong, adding bitterness and anger when the inevitable grieving process occurs.

Don’t be discouraged if you try to broach the topic with your parents and it’s a non-starter. Be patient and gently persistent. It took a couple of glasses of red wine to get the conversation going with my Father when we first broached the subject as a family – long before his illness.

Knowing where your parents stand on these issues and having a plan in place will save your family much grief later. It certainly did with my family.

Posted in Relationship to money

Seven Ways to De-stress about Money

By Sheila Walkington, BBA, CFP®

Everyone experiences stress as a natural reaction to certain events or circumstances. The severity of the reaction will, of course vary from individual to individual. For example, some love the sound of thunder while others find it a source of great anxiety.

Though you and I may differ in terms of what personally causes us stress, there are several types of life stressors that have a dramatic influence on all humans according to extensive research studies. Large scale research projects completed by the Center for Disease Control, the American Institute of Stress, and many others that examined the causes of stress in humans confirm that there are certain life events that most humans find very stressful. Stress due to issues related to personal finances sits at #4 of the top 10 causes of stress.

For some, it’s about making ends meet or family conflicts, for others it’s about long term financial security, being taken advantage of or the ups and downs in the stock market. Whatever your stress, you can improve your relationship to money by becoming more aware of what’s blocking you from financial peace and taking the steps to set yourself free.

1. Live the Life that You Want

If you are waiting to reach some magic number in your bank account or to be debt-free before you start living the life you want, you are probably giving money way too much hold over your life. While it’s important to pay the bills and to be financially responsible, a healthy relationship to money comes from using money to support your dreams and goals, not as an end in itself. So, be clear about what you want your life to look like, get your financial house in order and align your money with your life. Continue reading

Posted in Money Coaching, Relationship to money

Women and Work: Canada’s Economic Crossroads

By Sheila Walkington, Co-Founder and CFO Money Coaches Canada

The world happiness report was recently released by the United Nations and Canada ranked #7 out of 156 countries. The report rates countries based on income, healthy life expectancy, social support, freedom, trust and generosity, and Canada has consistently placed well since the report began in 2012.

But it would be foolish to think that this report means we have little to worry about as a nation. The truth is, supporting the Canadian way of life, with our strong social safety net, is getting more costly, especially as a huge segment of the population moves into retirement. As a result, Canada has arrived at an economic crossroads. In order to maintain our economic prosperity, we need our economy to grow. But that isn’t going to happen unless we come up with some bold and creative ideas. Continue reading

Posted in Money Coaching

7 Stages of Financial Well-Being® – Where do you stand?

By Karin Mizgala, BA Psyc, MBA, CFP®

We are just over three months into 2018 – 25% of the year is in the rear-view mirror. How are your financial New Year’s resolutions holding up? Are you doing better financially? If yes, great. If not, please read on.

We’ve found that one of the biggest reasons why individuals do not follow through on their financial resolutions is that they don’t have a clear sense of what financial success means. The other reason is that it’s just not easy to do what it takes to be good with money in the complex and fast-paced culture in which we live.

For many clients, we’ve seen that success comes from a deeper understanding of where they stand with money, emotionally and financially, developing concise and attainable goals, getting organized and implementing a manageable plan to move forward.

Of course, it takes less effort to hope that a windfall will suddenly appear. But wouldn’t it be nice to finally feel in control of your money once and for all – on your own terms? Continue reading

Posted in 7 Stages of Financial Well-Being®, Money Coaching, Relationship to money

Women, Money and Power: How Times are Changing for the Better

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

On March 8th, we celebrated International Women’s Day (IWD), a global day recognizing the social, economic, cultural and political achievements of women. But IWD is about more than one day; the theme for the whole of 2018 is #PressforProgress.

In 2017 we saw unprecedented numbers of women stand up and give voice to abuse and inequities that have long been silenced. #PressforProgress is the logical next step, as women, and men, want more than the recognition of disparity; they want change.

One of the very real and important ways a woman can be empowered is through financial confidence and action. Regardless of age or income, a woman who controls her money, has the power to control her future. Continue reading

Posted in Financial Literacy, Investing, Relationship to money

5 Ways A Money Coach Can Help You Win Your Own Financial Olympics

By Christine Williston, B.A., FPSC Level 1®

In preparation for the 2010 Winter Olympics in Vancouver, our nation set out to “Own the Podium.” That program is still delivering the results as the recently concluded PyeongChang 2018 Olympic Winter Games aptly demonstrated.

What an amazing two weeks of athletic competition. It’s impossible not to be proud of our Olympians. A record medal haul of 29 – 11 gold, 8 silver and 10 bronze. And so many stories of triumph and sportsmanship.

“Our athletes have made history at these Games,” Canadian Olympic Committee president Tricia Smith said. “From a country chasing the powerhouse nations, we are now proudly in the top group growing in strength and contending for No. 1. And we’ll keep going.”

The side of Olympic glory that we don’t see

5 Ways A Money Coach Can Help You Win Your Own Financial Olympics

The moments of glory are electric and inspiring, but what we don’t see on the Olympic stage are the years and years of training, the tired muscles, the setbacks, disappointments, sacrifices and deep commitment to a goal. In the moment of triumph the athlete stands alone on the podium, but the path to the podium is paved by supporters and coaches. Becoming an Olympic calibre athlete starts with a personal dream, but also requires a great deal of financial resources for equipment, practice space, travel, physical therapy, and many other sport specific costs.

What’s your dream?

You may not be an aspiring Olympian, but you probably have your own Olympic sized dream: Continue reading

Posted in 7 Stages of Financial Well-Being®, Money Coaching

RRSP vs RESP: How to Make the Right Choice?

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Family in kitchen with laptop smiling

From the moment our children are born we want the best for their future. Success is never guaranteed, but we hope to be able to offer them opportunities. And what better opportunity is there than education? It seems like a straight forward assumption that we would contribute to a Registered Education Savings Plan (RESP) on their behalf.

But what about our own future? What about contributing to a Registered Retirement Savings Plan (RRSP)? Canadians are living longer, and the cost of living is on the rise. If we don’t have a solid retirement plan, are we at risk of living in our well-educated child’s basement? OK, that may be a tongue-in-cheek option, but the question of where to place our investment dollars is valid. What’s a parent to do?

With RRSP season is full swing, now is the perfect time to weigh your options and make the right decision between RRSP and RESP. This year, the deadline is March 1 for RRSP contributions – you have until then to add funds into your RRSP and claim that contribution when you file your 2017 income tax return later this year.

The Fundamentals: What You Need to Know

Continue reading

Posted in Ask Your Money Coach, Investing, Money Coaching, Retirement savings

Six Steps to Financial Bliss – Valentine’s Edition

By: Sheila Walkington, CFP

With Valentines Day just around the corner, now is the perfect time for every couple to have a conversation about one of the most important factors affecting relationships – money.

For many couples, there is nothing that dampens love more than the subject of finances. In fact, study after study shows that money problems are the single biggest cause of relationship stress and divorce – with sex and raising kids rounding out the big three. But does money always have to represent tension and friction between your partner and yourself?

Follow the following six tips and you’ll be on the path to financial bliss. Continue reading

Posted in Money Coaching, Relationship to money

Exchange Traded Funds: Everything You Wanted to Know but Were Afraid to Ask

By Karin Mizgala, Co-Founder and CEO Money Coaches Canada

Most Canadians are very familiar with mutual funds. In simple terms, a mutual fund is made up of a collection of individual stocks, bonds or other securities carefully chosen by a fund manager, with the goal of generating returns for the investors while balancing risk. Investors pay a management fee, referred to as the Management Expense Ratio (MER), to cover the cost of the management, marketing and administration of these funds. In Canada the average MER is around 2%.

With greater focus on the cost of investing and fee transparency in Canada, it’s not surprising that there is growing interest in Exchange Traded Funds (ETFs), which in most cases, have lower fees than mutual funds. But what else should you know about this up-trending investment option before deciding if ETFs are right for you? Continue reading

Posted in Financial Literacy, For your information, Investing