Where there’s a will, there’s usually at least one executor – a critical role whose mandate is, as the title suggests, to execute your instructions on the distribution of your property after you die. This blog post is by no means intended to be legal advice but merely a call to use common sense when deciding on the future of your assets.
To be an executor is a serious and time-consuming undertaking that comes with fiduciary responsibilities and legal liabilities. Yet many people don’t take the time to truly consider if the person –or persons – they’ve chosen has what it takes to take on the consequential demands of the role. Is the person willing and able to perform the duties you are asking for?
Making the wrong choice for an executor may be a mistake you won’t live to regret. But the beneficiaries of your estate – and perhaps even your appointed executors – will most certainly wish you had made a better selection.
It starts with understanding
Most people know the general definition of the executor role and those who don’t have Google to help fill in the blanks. Few people really know what it takes to be an executor. What a lot of people don’t realize is the number of tasks and moving parts associated with being an executor. For example, there will be paperwork – a lot of it – because your executor is responsible for submitting your will for probate, accounting for your assets and debts, and filing your outstanding taxes. Your executor will also need to consult and coordinate with your accountant, lawyer and other advisors. Your executor may even be called upon to resolve disputes between your heirs.
Educate yourself (and the family) then identify the best candidates
Your eldest child may have done a great job of organizing family dinners and smoothing over sibling rivalries. Then there’s your business partner – an upstanding colleague with smarts and integrity. But before you start naming them as executors, ask your lawyer for an executor job description that details every possible task under this role. Then identify the skills, knowledge and character traits needed to carry out each task. You’ll find that many of the tasks require a level of financial literacy while others require careful attention to detail. Qualities such as good reasoning, sound judgment and fairness are also critical in this role, as is the ability to communicate and mediate between parties. As you match desired qualifications to your executor’s job description, you’ll likely start to make a shortlist of suitable candidates and perhaps scratch off a few of the names you originally had in mind.
Make sure you’ve got the right mix
If you’re appointing more than one executor, make sure you’ve got the right mix of people. This means ensuring your executor team will have the ability to talk through disagreements and bring a fair and united approach to ensuring your wishes are carried out. It’s also a good idea to set down some rules of engagement and decision-making. For example, will decisions have to be made unanimously, or will majority rule? Will one executor have veto powers? As you consider these points, you should also think about potential candidates for back-up executors in case the ones on your top list decline or are simply not available to take on this responsibility.
It can take years – and potentially a lot of stress – to carry out the duties of an executor. While your appointees may consider it an honour to be entrusted with such an important responsibility, they’ll likely also appreciate some financial compensation for their time and effort. Talk to your lawyer about paying your executors, keeping in mind that compensation typically ranges within 2.5 per cent to five percent of your estate’s total value. This is especially critical if the size and makeup of your assets, or your family structure and dynamic, could make the distribution of your property complicated and challenging.
No matter what, have the talk
Yes, talking about your impending death can seem morbid and might cause pain for you and your family. But not discussing your estate plans today can bring even more pain for your heirs tomorrow. So have the talk with the people who stand to inherit your property, as well as with those you’d like to entrust with the responsibility of executing the terms of your will. This will give you a chance to explain why you’re making certain decisions for your estate, and to hear any concerns your family and appointed executors may have. You may be surprised by what you learn from these conversations and how these new insights can help ensure you’re taking care of the people you love, in exactly the way you want.
It’s taken you a long time to build your assets, and you may still have many years left to keep growing your wealth. Don’t let all your hard work go to waste when you’re gone. Don’t risk the harmony in your family. Take the time to ensure your estate plan is built on a solid framework that includes the right executor and all the required conversations. Not talking about the problem, will definitely not make the problem go away.
Let’s start the conversation. Contact us today at firstname.lastname@example.org or 647.349.7070 to get the conversation started.
Financial advisor Elke Rubach, right, enjoys beach time with Emily Strike. Rubach mentors Strike, whom she met through Fashion Heals for Sick Kids. Photo by Christopher Lawson
Elke Rubach was a successful lawyer when she discovered her passion for helping people understand finances
Elke Rubach was determined to do things the right way from the get-go when she set her sights on a career in the financial advisory business. Already an established lawyer, she spent a full year talking to experts to learn about the industry, including the products it has to offer and what they can do for clients, and about client-advisor relationships.
Rubach is the founder and president of Rubach Wealth, a “holistic” family advisory firm in Toronto. Over the past nine years, she built a practice that serves 280 professional clients of all ages and stages of their careers. As a result, their investable assets range from about $500,000 for young professionals to $3 million–$5 million for established families, and can be in excess of $35 million for business owners.
“I am responsible for my clients’ spouse and children too,” Rubach said. “At the very minimum, if Dad dies or Mom dies, I need to be able to look [the survivors] in the eye and say, ‘I’m really sorry this happened. But Dad or Mom did the right thing in looking out for you, and I’m here for you, too.’”
Rubach’s strong work ethic and empathy toward others originated early in her life. A native of Mexico City, Rubach was only 15 when her father, Karl, died. Her mother, Clara, was left with four children and a whole new set of responsibilities for raising the family.
“Mom had to go from not working while she had the four kids to having to figure out how to make a living,” Rubach said. “Watching how she made it work, I think, gave me grit.”
Rubach, who is fluent in English, French, Spanish and German, graduated law school at the Instituto Tecnológico Autónomo de México. She was called to the bar in 2000, and began her career at the law firm Ritch Mueller Heather y Nicolau SC in Mexico City.
In 2001, Rubach relocated to the U.K. to study at the London School of Economics and Political Science on a Chevening Scholarship, earning her master’s degree in law the following year. She subsequently was hired as an associate in the London office of McCarthy Tétrault LLP.
One of the key files Rubach worked on concerned Argentina’s severe debt crisis and involved her firm’s Latin America team in Toronto. In 2002, McCarthy Tétrault asked Rubach to transfer to its Toronto office for a year.
“Nineteen years and three kids later, I’m still here,” she said.
Rubach left McCarthy Tétrault in 2005 to work for Bank of Nova Scotia. While working for Scotiabank’s compliance department, she discovered her passion for helping people control their finances.
This discovery sowed the seeds for a career change. “I loved spending time explaining to people what they were getting into and how everything is connected,” Rubach said. “I saw that people often go through life busy — building careers, looking after people — but in their financial affairs there’s absolutely zero clarity. That’s where I said, ‘There’s a niche for that,’ and decided to open up my own business.”
Rubach burnished her credentials by earning her certified financial planner and chartered life underwriter designations during the early years of her practice. She added the family enterprise advisor designation in 2020.
Rubach believes the trusting relationships she has established with her clients is her biggest success. “It’s a collaboration,” she said. “There is professional respect both ways. In my conversations with clients, I say, ‘Let’s take a long-term outlook — invest time and put a proper plan in place. And let’s invest in the relationship.’”
Rubach encourages clients to ask as many questions as they need to feel comfortable. And she isn’t afraid to ask her clients tough questions.
For example, if a client has a family business and three children, Rubach will ask questions such as: “Have you talked to the children about your business? Do they want to take it over? If you give this business to your eldest son, what’s going to happen with the other two children? Does your son know how to run the business?”
Answering those and many more questions is necessary to develop a practical plan that will provide peace of mind for the clients. “It gets emotional, but I love the intermediation of those intergenerational transfers,” Rubach said.
Rubach Wealth has five employees, including an associate and three marketing and administration staff. “I’m the partner,” Rubach said, “but I’ve always told my colleagues that nobody works for me. We all work together.”
Rubach takes pride in her ethical standards. “We strive to deliver value in our advice that far exceeds the cost,” she said. “I firmly believe that a mis-sold insurance policy can destroy a family. I am very conscious of that.”
She also levels with clients and prospective clients regarding expected returns on investments. “We do not guarantee rates of return,” she said, “and I am honest about that.”
One thing Rubach has learned is to temper her enthusiasm when a new financial product or service catches her eye, and not to rush to offer new ideas to clients. “I’m someone who is super-passionate about things,” she said. “Although passion is contagious, if you go too fast in business with a product or a strategy — and don’t follow the client’s pace — you risk losing the client.”
Rubach has been a member of the Ontario Ministry of the Attorney General’s Investment Advisory Committee of the Public Guardian and Trustee since 2019. She is serving a three-year term as one of nine voting members, whose role is to advise the Public Guardian and Trustee on how to invest the money of people who are incapable of making such decisions.
“This role further reminds me of the too often overlooked importance of having a will and powers of attorney,” she said.
Rubach, a mother of two sons and a daughter between the ages of 10 and 14, loves travelling, cycling and golf, although she admits the last is a “work in progress.”
Rubach also is an active volunteer. She is a member of the advisory board for TransPod Inc., which is developing affordable and sustainable ultra high-speed transportation in Canada. She also has been a board member of Lycée Francais de Toronto, a private school, for the past seven years.
Rubach holds several voluntary positions with Hospital for Sick Children in Toronto, including co-founder and chair of Fashion Heals for Sick Kids, a fundraising fashion show in which the models are kids, researchers, doctors and others connected to the hospital. Models are professionally styled for the night, according to Rubach.
“For the kids, and for us, it’s the experience of a lifetime,” Rubach said. “Through fashion, they’re telling you their story — the resilience and courage that these kids have. We keep in touch with most of our models and have seen them grow from kids to inspiring young adults.”
She also speaks frequently at events, especially about topics affecting women’s financial health and well-being.
“I’m really passionate about empowering women,” Rubach said, “financially, socially, and professionally.”
Making financial advice a family matter
Even with careful planning and diligent saving, some parts of retirement planning are out of your control. Factors like longevity, rising medical costs and the ups and downs of the market can have an impact on your savings. But while you can’t plan for the unexpected per se, there are ways you can manage these risks and protect your retirement income. Here’s a look at four common retirement risks and how to address them.
- Longer life expectancy
People are living longer now than ever before. The average life expectancy in Canada is around 80 years for men and 84 years for women. That’s about 10 years longer than people were living in the 1960s.
There are many benefits to living longer, but it also means carefully considering strategies to avoid outliving your savings. One way to combat this is to delay the age you start collecting your Canada Pension Plan (CPP) benefits. You are eligible to start collecting your benefits at age 60, but the longer you wait, the greater your benefit will be. If you can hold out until age 70, you’ll receive the maximum monthly amount.
You may also want to consider other sources of regular income, such as annuities to supplement CPP benefits and withdrawals from retirement accounts. You typically purchase annuities with a lump sum, and the annuity then makes regular payments to you over a fixed period of time. That said, annuities come with unique trade-offs and risks. For example, it’s possible inflation could rise higher than an annuity’s guaranteed rate. What’s more, annuities are generally illiquid investments, meaning your money will be tied up for a set period and you won’t be able to access it without facing stiff penalties. Discuss annuity options with a financial advisor before adding one to your portfolio.
- Medical costs and long-term care
Another implication of living longer is increased health care costs, including long-term care services. Long-term care refers to assistance needed for daily activities, like eating, bathing or dressing. This type of care can be provided at home or an assisted living facility like a nursing home. About 7 percent of Canadians age 65 and older live in some sort of assisted living facility, and the average cost of a private room in these facilities is about $33,349.
Even if you don’t anticipate needing long-term care anytime soon, it may be worth considering long-term care insurance now in case you need these services in the future. Consider purchasing coverage well before you retire as it typically becomes more expensive as you age.
- Market risk
Market fluctuations are a natural part of the market cycle, yet a downward turn right before retirement can lower the value of your investments just when you need them most. As you near retirement, consider rebalancing your portfolio to include more lower-risk investments, like bonds, that are less likely to be affected when stock markets head south.
- Rising inflation
Inflation reduces your spending power and can have a big effect over a 30-year (or longer) retirement. There isn’t much you can do to stop inflation, but you can invest in assets that protect against some of its effects. Property prices tend to rise with inflation, making real estate investments a good inflation-protected option. You may also consider inflation-linked bonds (ILBs), which offer a fixed interest rate, but their principal is adjusted for inflation.
Understanding these risks to retirement can help you know how to address them and keep your savings on track. Contact us today at email@example.com or 647.349.7070 to get the conversation started.
You’ve spent years planning and saving for your retirement. And then, out of the blue, your employer hands you an early retirement offer that could change everything. An early retirement, or “voluntary severance,” offer is a financial incentive to resign that an employer may offer to senior employees when they need to reduce payroll costs. This voluntary package could be a boon, giving you the freedom to pursue other activities, or an unwanted complication throwing a wrench in your retirement plans. If you’re presented with early retirement, should you take the offer? Here are some factors to consider:
- Understand what’s in the package
When you receive an early retirement offer, the first step is understanding its component parts. Offers commonly include:
- Severance pay. The offer will probably include a lump-sum payment. For example, your boss might offer one- or two-weeks’ salary for every year you’ve worked for the company.
- Health coverage bridge. Your employer may offer to extend your job-based health care coverage to continue covering services unavailable under the public health care plan.
- Pension bridge. The package may include temporary retirement payments to keep cash flowing until your pension or the Canada Pension Plan (CPP) kicks in.
- Additional perks. An early retirement can include almost anything else, such as free financial planning or career counseling to help you move on to another job if you choose.
- Decide on your retirement plans and health coverage
An early retirement offer may complicate your financial plans. The financial incentives in the package will likely amount to less than you were expecting to receive in compensation in your remaining years of work.
Consider working with a financial advisor to determine whether a lump-sum payment will leave you with enough income to maintain your desired lifestyle once you retire. Are there adjustments you can make to your plan that will make early retirement more feasible, such as downsizing your home?
Consider, too, how early retirement may impact your CPP retirement pension. Will you have to collect benefits earlier than expected, permanently reducing your payments? Will doing so leave you with enough monthly income?
Health coverage is a parallel concern. If accepting the offer would mean losing your necessary supplemental health insurance, you have to decide whether you can afford taking out your own policy before you accept.
- Consider your ability to find another job
Even if you can’t afford to retire early, it could be worth it to accept the offer and then find a comparable job elsewhere, pocketing the package as a windfall. But the success of this strategy hinges on your ability to find another job, and in a reasonably short amount of time.
Before you accept the early retirement offer, research the job market. Are there plenty of openings at businesses that are willing to pay an experienced worker a salary comparable to yours? If not, you may not be able to count on replacing your current job with another one.
- Asses the financial stability of the company
If your company is offering early retirement packages, that might be a sign that the business is finding it difficult to stay in the black. If you decline the voluntary offer and stay on with the company, you could see more rocky times ahead. And if that happens, there’s no guarantee that the early retirement offers will come back. If you don’t have confidence in the medium-term viability of the company, taking the offer could prove to be the best move, even if what you’d really rather do is stay on.
- Know your alternatives
When your employer offers you voluntary severance, you don’t have to choose to simply decline or accept it. You can also negotiate the package higher or offer an alternative. If you’re amenable to retiring early but the package on offer leaves you with a gap in health coverage or too little severance pay, your employer may be willing to sweeten the deal. If retiring early isn’t an option for you, but moving to a part-time schedule is attractive and feasible, you could offer that as an option. It may satisfy your employer’s ultimate goal to cut back on payroll without having to fire someone.
A trusted advisor can help you navigate the opportunities and challenges of your golden years. Contact us today at firstname.lastname@example.org or 647.349.7070 to get the conversation started.
How to Evaluate an Early Retirement Offer | Second Careers | US News
Early Retirement as an Alternative to Layoffs | The Hartford
Wave of early retirement hits workforce. How to negotiate best deal (cnbc.com)
Here’s what to consider if your company offers an early-retirement package (cnbc.com)
Canada Pension Plan – Overview – Canada.ca
Alternatives are investment options beyond the typical stocks, bonds and cash found in most portfolios. They can be tangible assets like precious metals, or they could be financial assets like private equity or hedge funds. Alternatives tend to be riskier than traditional assets, which means investors usually have to meet certain criteria to access them. Here’s a closer look at alternatives and some of the most common options available.
What is an alternative investment?
An alternative investment is a financial asset which does not fall under a conventional investment category, like stocks or bonds. These can include real estate, private equity, commodities or even art and antiques. They aren’t subject to the same regulatory requirements as conventional investments and don’t need to disclose the same amount of information as publicly traded companies. Alternative investments are also fairly illiquid. The investor pool may be limited, making it hard to find buyers. Additionally, it may be difficult to determine asset value.
Because alternative investments tend to be more complex and less regulated, they also come with a higher degree of risk than conventional securities. As a result, they are typically only available to accredited investors. An accredited investor must have an earned income of at least $200,000, or $300,000 together with a spouse, for at least two years in a row. They may also have at least $1 million in financial assets alone or with a spouse, or net assets surpassing $5 million.
Types of alternative investments
A hedge fund is a private, professionally managed and largely unregulated pool of capital whose managers can buy or sell any assets. Because they operate under fewer regulations, hedge funds can invest in more complicated deals than other funds. They can also use complex strategies, like volatility or merger arbitrage, to generate higher returns. Hedge funds tend to be more expensive to participate in than conventional investments.
This category can include rental properties, real estate development companies, raw land, preconstruction investments and more. Real estate is a valuable diversification tool as it experiences low volatility and is not highly correlated with other asset classes. So, when stocks are down, for example, real estate may do better.
Private equity involves investing directly in companies that are not publicly traded. A relatively large investment is typically required. Often these investments are in new companies with the potential for substantial growth. However, new companies are relatively untested, exposing investors to the risk they might fail.
Crowdfunding arrangements pool together money from individuals to fund new business ventures, such as real estate projects. In return, investors receive equity shares of the company. Non-accredited investors may be able to participate in regulated crowdfunding, but there are limits to how much they can invest. There are no limits for accredited investors.
Commodities are often investments in raw materials, such as metals, energy and agricultural products. They can be risky investments, since outside factors, like the weather or natural disasters, can affect their supply and demand. However, commodities can also provide diversification within a portfolio, since their prices tend to move in opposition to stocks.
While alternative investments can be a key tool for diversification, it’s important to do your due diligence when considering which investments to buy. Understand the risks and limitations and remember that alternatives may be difficult to sell quickly and could potentially be more volatile than traditional investments.
While alternative investments can be a key tool for diversification, it’s important to do your due diligence when considering which investments to buy. Understand the risks and limitations and remember that alternatives may be difficult to sell quickly and could potentially be more volatile than traditional investments. To find out if alternative investments is the right strategy for you contact us today at email@example.com or 647. 349.7070.
Registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) are tax-advantaged accounts that can help you boost your retirement savings. Both accounts are designed for long-term growth, but they differ in how your contributions are taxed and when you can withdraw funds. Here is a breakdown of the differences between an RRSP and a TFSA and how to choose the best one for you.
Registered retirement savings plans
An RRSP is designed specifically for retirement savings. Anyone with an earned income who files a tax return can contribute to an RRSP. Contributions are tax-deductible and your earnings grow tax-deferred. There is no age requirement for when you can make withdrawals from your RRSP, but when you do withdraw funds, you will pay income taxes on both your contributions and earnings. You will need to claim your withdrawal as income when you file your taxes.
You can contribute up to 18% of your earned income in the previous year to an RRSP, with a maximum contribution amount of $27,830 for tax year 2021. There are no requirements for minimum distributions, but you can no longer make contributions to an RRSP once you turn 71. At that point, you must close your account and either convert it to a registered retirement income fund (RRIF) or buy an annuity.
Tax-free savings accounts
Unlike an RRSP, a TFSA can be used for any kind of savings goal, not just retirement. Anyone age 18 and older can contribute to a TFSA, and you don’t need earned income to qualify.
Contributions to a TFSA are made with after-tax dollars and your earnings grow tax-free. Withdrawals are tax-free and you can take money out at any time for any reason without paying a penalty. And if you do take money out, you can recontribute the same amount the following year in addition to the annual maximum of $6,000.
How to choose which account is best for you
Both RRSPs and TFSAs allow you to grow savings through investments, but how they can be used and how and when they are taxed may have an impact on which account you choose.
An RRSP can only be used for retirement savings. You must have an earned income and file a tax return to qualify. A TFSA, on the other hand, can be used for any savings goal, and anyone age 18 and older can contribute regardless of earned income. RRSPs offer much higher contribution limits, and contributions are tax-deductible, lowering your tax bill the year you contribute. You defer paying taxes until you withdraw funds. TFSAs offer smaller contribution limits; contributions are made with after-tax dollars; and withdrawals are tax-free.
You can make contributions to both accounts at the same time, and if you can afford it, maxing out contributions for each is a great strategy for saving. However, if you can only choose one, first consider your savings goals. If you are saving for something other than retirement, a TFSA may be right for you. You may also want to consider your future tax rate. If you anticipate a higher tax rate in the future, a TFSA may be the better choice, since withdrawals are tax-free. And if you expect a lower tax rate in retirement, an RRSP can offer you more tax advantages since you can lower your taxable income now and pay a lower tax rate on future withdrawals.
Whether you choose to fund an RRSP, TFSA or both, you’ll be taking advantage of tax benefits that can supercharge your savings and bring you closer to achieving your financial goals.
We can help put together a solid long-term plan that suits your financial goals and needs and answer any questions you may have about TFSAs and RRSPs. Contact us at 647-349-7070 or at firstname.lastname@example.org to get the conversation started.