Family matters

A great many of the situations that arise among family members involve not only personal issues but also a financial element. Managing a situation may go more smoothly if you involve us on the wealth planning side.

Here are a few examples of how individuals and their advisor may approach a family matter.

Helping a parent

A couple is about five years from retirement and they’re trying to decide if one spouse can leave their job to help a parent who needs care. They ask their advisor how the loss of income would affect their retirement plans.

The advisor tells the couple that if the spouse leaves their job, the couple can generally meet their savings objective if the working spouse retires two years later than planned. If the working spouse prefers to keep their original retirement date, they would need to make some compromises to their retirement lifestyle or estate plans, but would have no worries about securing a comfortable retirement income.

With this information, the couple decides one spouse will retire earlier to care for their parent and they can determine later when the working spouse will retire.

Caring for a child

A couple has a child who recently graduated from university, with their education savings covering all costs. However, the child now has a different career aspiration and wants to return to university, out of town, in a new program.

The couple supports their child’s decision, but the question is whether they should support that decision financially. They meet with their advisor to find out how helping their child would impact their wealth plan and to brainstorm options. After considering several scenarios, they decide to cover the tuition costs and have their child apply for a student loan to cover the other expenses.

You and your spouse

An individual remarries and the new couple wants to resolve a difference of opinions about retirement savings. They plan to open a joint non-registered investment account, but one spouse is a conservative investor and the other is a more aggressive investor.

The couple consults their advisor, who outlines three possible solutions. They can compromise by taking a balanced approach that focuses on medium-risk investments, or they can each stick to their preferred investments, either in a joint account or in separate accounts. The couple is satisfied that the net effect of any choice is an effective compromise, with the conservative investor gaining more growth potential and the aggressive investor adding stability to their investments overall.

A grandchild’s future

A grandparent wants to start contributing to the post-secondary education costs for a young grandchild. The grandparent’s first thought is to open a Registered Education Savings Plan (RESP), but they ask their advisor about other options. The advisor outlines the pros and cons of a variety of choices—an RESP they set up, an RESP the grandchild’s parents set up, a trust account, a Tax-Free Savings Account (TFSA) or a non-registered account. This particular grandparent, with their advisor’s assistance, decides to use both the RESP the grandchild’s parents set up and a new TFSA they open specifically for this goal.

You may not experience exactly these scenarios, but you’ll likely encounter other family situations that involve a financial element. When such a situation arises, we’re here to help you make the decision that’s right for you.

Involving your children in estate planning

You don’t need to share all the details of your will, but you and your children can benefit if you discuss certain estate planning topics.

Naming your executor. Do you have one child and wish to name them as your executor?1 Make sure they understand the duties involved and are willing to assume the role. If you have two or more children, find out their views about becoming your executor so you can determine whether you’ll name one child or designate co-executors.

Planning for a vacation property. You may assume you’ll be handing down the family vacation property to your children, but you’ll need to change your estate plan if not all children want to inherit the property.

Making unequal inheritances. You may have a reason for bequeathing different amounts to each child. For example, you might leave less to one child because you gave them funds to make a down payment on their first home. Discussing such matters can help prevent discord among your children and avoid any resentment toward you.

 

¹ Or estate representative, estate trustee, liquidator, personal representative or administrator, depending on the province.