Debt-Free Forever by Gail Vaz-Oxlade (the beginning after the end read novel .TXT) 📕

Follow me for a minute down Worst-Case Avenue. You and your hubby were in a car accident, and now you’re in a coma. You haven’t executed a financial power of attorney, so no one can touch the money in your bank account. Even as your sick leave or disability income accumulates by automatic deposit, your life insurance lapses (no one can write cheques on your behalf), your mortgage renewal goes unrenewed, and your kids’ tuition remains unpaid.

Assuming you make a full recovery from your accident, at best you’ll find your life in a shambles. Shuffle off this mortal coil and not only will your family be devastated emotionally and financially, the government will step in to decide who gets what. Not a pretty picture, is it? And all this can be avoided by creating an estate plan.

GAIL’S TIPS

Since a child or grandchild who is the beneficiary of an RESP does not have the legal interest in the plan, if you’re the only subscriber on an RESP, you could face a problem. if you do not have a will, and you haven’t named a “contingent subscriber” for the RESP, the plan would likely be terminated on your death and all the contributions and interest earned would fall into your estate. And, since the RESP is gone—whoosh—the Canada Education Savings Grant money in the plan would be forfeit and returned to the government. If that’s not what you want, make a will and name a contingent subscriber to the RESP.

An estate plan consists of a will, which says how you want your assets to be distributed, along with powers of attorney (POA). There are two types of POAs, and they both have to be enduring—a legal term meaning they have to outlast you—to be useful. A financial POA identifies who will manage your money and under what circumstances while a medical POA identifies who will make your health-care decisions if you can’t make them for yourself.

If you have kids, your estate plan should also include a guardianship appointment so your kids end up being raised by someone you like. You might also include a trust as part of your estate plan.

A trust describes a relationship that exists when one person (the trustee) holds title to property on behalf of another (the beneficiary). A living trust is created when the settlor (the person giving the money or stuff or whatever) is alive. When a trust is set up through a will, it’s called a testamentary trust.

Whether you wish to protect a same-sex partner from the prying eyes of family that hasn’t been so willing to accept your alternate lifestyle or you want to save your spendthrift child from his financial demons, a trust can do the trick. And if you’re trying to protect a child who may be disabled and financially dependent, a trust is irreplaceable.

DO YOU NEED A LAWYER?

Yes. Yes. Yes. I know there are will kits available. I know they are cheap. But you know what they say: ya gets what ya pays for. Estate planning is one of the last bastions of complicated and opaque language. If you don’t have an expert who specializes in legal gobbledygook, you may not get what you want.

Here’s an example of what I mean. Let’s say you make your own will, in which you say, “I want all my money to go to my wife.” What do you mean by money? Do you mean the money in a specific bank account? And what happens if you change banks later on? Or if you change wives in all but the legal sense? The term household contents can also have myriad meanings while wife may have only one.

Do your household contents include your very valuable stamp collection? The car in your garage? Your grandmother’s diamond ring? If you think that’s picky, wait till you see what can go into the naming of a beneficiary.

If you’re still hesitating about creating an estate plan because you don’t want to spend the money, know that what you save today you’ll make up for in taxes and fees later on, and then some. A good estate plan will distribute your assets tax efficiently while minimizing fees. It takes some thinking. It can be a little unnerving. But it’ll also make it easier on the family you leave behind.

It’s a grown-up thing to do, so grow up and do it.

11

COPE WHEN THE CACA HITS THE FAN

One of life’s hard truths is that it doesn’t matter how carefully you plan, how hard you work, or how diligent you are in taking care of the details, crap happens! It’s inevitable. While it may appear that there are some people who just cruise through life with nary a bump, they just haven’t hit theirs yet. But it’s coming.

It’s nice to think that life is predicable, but it’s not. And as my girlfriend Brownie says, “The golden rule is to get back up!” Having made a budget, made a debt repayment plan, made up your mind to live your life consciously and take care of your money, you may dream that it’ll be smooth sailing from here on in, but it is only a dream. Sometimes life sucks.

One of my mantras is: Plan like a pessimist, so you can live like an optimist. Wishful thinkers believe that bad things can’t happen to good people. But they can. And they do. From job loss to creditors calling loans to bankruptcy, life leaves lots of room for disaster. Here’s what to do when the caca hits the fan.

WHAT TO DO IF YOU LOSE YOUR JOB

Unemployment goes up. Unemployment goes down. And even if you live in a country with low unemployment, jobs may be scarce in the region you call home. With North American jobs moving overseas to low-cost labour regions, even the jobs we thought would be forever aren’t.

Industries thrive in one economy and go bust in another. Companies merge. Companies restructure. Companies downsize.