Time to review your will

I am always amazed at how few of my clients have prepared a last will and testament. There are so many good reasons to have one, and I would be hard pressed to think of a reason why not. It is something people always put off till tomorrow. The following article, written by Diane Nice, appeared the Toronto Globe and Mail on September 27 2010.

September 27, 2010

Holy matrimony! Time to review your will

By Dianne Nice
Globe and Mail Update

First comes love, then comes marriage, then comes a review of your will

First comes love, then comes marriage, then comes a review of your will.

If you don't review your will after getting married, you could leave your loved ones empty-handed when you pass away, says Barry Fish, a wills lawyer and co-author of Where There's an Inheritance: Stories from Inside the World of Two Wills Lawyers.

"We have reviewed many wills where a person's will was dated in the 1990s and, several years later, that person entered into a marriage. It invariably comes as a shock to people in this position when we tell them that their marriage has revoked their will and that they have no will at all," Mr. Fish says.

"The opposite situation arises where a person who is separated is often surprised to learn that his or her separation does not revoke the will that he or she had made while still married to the person from whom they separated."

Mr. Fish also advises those who are separated to double check their beneficiary designations on life insurance policies, RRSPs, RRIFs, TFSAs and deferred annuities. "These, too, must be changed, in addition to the will, if the separated spouse is no longer to be named on them. The will alone will not effect such a change."

Here are some other things Mr. Fish says to keep in mind when reviewing your will:

1. Have a backup plan. You need to name a replacement in the event that your executor dies, becomes ill or is incapacitated, otherwise someone will have to apply to the courts to do the job. The same applies to beneficiaries: If you don't name a backup beneficiary, with some exceptions, the law may decide what happens to your gifts.

2. Count your blessings. Have you had any children since you wrote your will? If so, you'd better make sure they are included as beneficiaries, or risk having them cut out completely.

3. Protect your child's inheritance. While the inheritance you leave your child is protected from a divorcing spouse, the growth on that inheritance is not. Be sure to include a family law clause to protect the income and capital gains made from that inheritance in the event that your child separates or divorces after your death.

4. Take stock of your assets. Outdated descriptions of your assets can create confusion when you die. If your will says "123 John Street" goes to your child but you have since moved, your child does not automatically get your new property. You need to include the phrase "any home I'm living in at my death" in the bequest.

5. Leave no grey areas. Ambiguous wording in your will can lead to more than one interpretation. If you leave one child your "antiques" and the other child questions the meaning, they could be headed to court.

6. Protect your disabled child. Some parents leave outright bequests to children who are on government disability support plans, unaware that this can put these benefits at risk. By including what's called an absolute discretionary trust in their wills for the benefit of their disabled children, parents can protect them from losing governmental disability benefits when the parents die.

7. Plan for death and taxes. If you hold shares in your own company, you have the right to make two wills. One will covers the company shares and the other will covers everything else you own. When done correctly, the dual will structure can save significant probate tax on the value of the company shares.

Have you heard of "rare earth metals" ?

Scanning the ROB in today's Globe and Mail, I came across this interesting read about "rare earth metals" - a topic I knew very little about. The article is written by Shirley Won, Investment Funds Reporter for the Globe and Mail.

Potential shortages due to market's dependence on China spark growing interest. But risks exist

Gold and silver may be stealing the limelight thanks to surging prices, but some obscure metals are also making their way onto investors' radar screens.

Rare earth metals, a group of 17 elements used to make everything from hybrid cars to mobile phones, came into the spotlight last week following reports that China had blocked exports of the commodities to Japan.

Beijing denied the reports, but the dispute underlined the market's dependency on China. The country, which produces 90 per cent of the global supply of rare earths, has already slashed export quotas on the metals this year by 40 per cent from 2009, a move which has pushed up prices and spurred new mining projects.

Potential shortages of rare earths, combined with growing demand for the materials, is sparking new interest in investment opportunities in the area, ranging from newly listed junior miners to an exchange-traded fund poised to list in the United States. But the sector is fraught with risks for investors, market watchers say.

China aside, the biggest reason to invest is the growing demand for the "heavy" or higher-grade rare earths used in hybrid and electric cars, said Jon Hykawy, an analyst at Toronto-based Bryon Capital Inc. "The rarest elements may come into short supply over the next two or three years."

The problem is not finding rare earths, but extracting them economically. The best way to play this sector is to buy several producers because the risk is too high to bet on one, Mr. Hykawy said.

The analyst has "speculative buys" on Canadian-listed Rare Element Resource Ltd. and Great Western Minerals Group Ltd.; U.S.-listed Molycorp Inc. and Australian-listed names like Lynas Corp. Ltd. and Arafura Resources Ltd. Molycorp, which is restarting its Mountain Pass mine in California, and Lynas are closer to production so they are less risky bets, Mr. Hykawy said.

'Strategic' Play

Hedge fund manager Steve Palmer of AlphaNorth Asset Management Inc., likes the "strategic nature" of rare earths, and has invested in juniors such as Stans Energy Corp. and Ucore Rare Metals Inc.

Ucore, which focuses on the Bokan area in Alaska, will benefit from a new desire by the U.S. to reduce its reliance on China for rare earths, which have military applications, he said. A U.S. senator has already introduced a bill promoting a domestic rare earth industry.

Van Eck Global, a U.S.-based provider of ETFs, has filed a preliminary prospectus for the Market Vectors Minor Metals ETF, which will track a minor metals index that includes producers of rare earths. But because it will invest in about 30 public companies, not all of which produce rare earths, it is not really a pure play on the sector, Byron Capital's Mr. Hykawy said.

Investors can also play rare earths through Toronto-based Dacha Capital Inc. (soon to be renamed Dacha Strategic Metals Inc.). The investment holding company began buying and stockpiling rare earths from China earlier this year, and stores them in warehouses in South Korea and Singapore, on the assumption that prices are on a long upward trend.

Dacha faces the risk that China could cut off rare earth exports, but, if that happens, the material stored outside the country would be more valuable while new projects coming on stream will provide new inventory, chief executive officer Scott Moore said. Unlike the risk in spending money in advancing a mining project, "I can sell all my inventory, turn it into cash and redirect it back to shareholders," he added.

Rare, but essential 

What are rare earth elements or metals?

They are a collection of 17 elements that have become increasingly important in the manufacture of light weight, super-miniaturized components. The scarcer heavy rare earths, such as dysprosium and terbium, command a premium price compared with light rare earths.

Where are rare earths used?

Batteries and magnets for electric and hybrid cars, mobile phones, iPods, digital cameras, wind turbines, computer monitors, superconductors, solar panels and military hardware like fighter jets and nuclear weapons.

Are you misplacing hundreds of $$ ?

I found this article on www.msn.ca. It was written by By Liz Pulliam Weston, September 17, 2010 - and hits the mark in several places.

Every time you buy a duplicate of something you already own, leave a rebate unclaimed or forget to pay a bill on time, you're burning money.

Nancy Lester Anderson of Sacramento, Calif., just found $100 worth of expired gift cards in her "to do" pile.

Christine Moore of Quincy, Ill., missed out on $300 of manufacturer rebates on her new appliances because she misplaced the paperwork.

Tom Wyatt of Beaverton, Ore., estimates he's spent $100 to $200 replacing tools he already has.

"Every time I need to do something around the house, I have to go buy a new tool," he wrote on my Facebook fan page. His repeated refrain: "I know that I have one of these, I just can't FIND IT!!!!"

The National Association of Professional Organizers has never commissioned a survey on what the typical U.S. household pays for clutter and disorganization, says its president, Laura Leist. But if such a survey were conducted, Leist and I bet the toll would be in the hundreds of dollars a year. For some families, it's in the thousands.

Exhibit A is the self-storage industry, which rakes in $22 billion annually, according to the Self Storage Association. One in 10 U.S. households rents a storage locker, which means an average annual cost of about $2,000 per household for storage.

Easier to find space than time?
There are reasons to rent a storage facility besides being unable to part with your clutter, of course. About 4% of the industry's units are rented by members of the military, who may store stuff while they're deployed. Storage facilities are a handy place to put stuff during a remodel or when you're trying to "stage" your home to sell.

But some of Leist's clients rent "two or three or five" units simply because they can't face the task of sorting through their possessions and discarding what they don't need.

"They don't want to deal with what's inside" the storage units, said Leist, a certified professional organizer and the author of "Eliminate Chaos: The 10-Step Process to Organize Your Home and Life."

That's just the tip of the iceberg of costs we pay for not being sufficiently organized. Consider:

* U.S. credit card issuers will collect more than $7 billion in late fees this year, according to Odysseas Papadimitriou, a former lending executive and the CEO and founder of CardHub.com.

* U.S. banks collected more than $37 billion in overdraft fees last year, according to research firm Moebs Services, before new rules kicked in that restricted such charges. One in four checking accounts had an overdraft fee during another 12-month period, according to a 2008 FDIC survey (.pdf) of 39 banks. Four percent of those banks' accounts had 10 to 19 bounced transactions, paying an average $451 in fees, while 5% had 20 or more, paying a whopping $1,610 on average.

* Each year, hundreds of millions of dollars in U.S. tax refunds expire unclaimed because people fail to file their tax returns within the three-year time limit. The unclaimed refunds typically average between $550 and $600, according to the Internal Revenue Service.

* Unpaid parking tickets and library fines have become big business for collection agencies, which increasingly have taken over dunning duties from municipalities. Municipalities are owed more than $40 billion, according to an estimate by Kaulkin Ginsberg, a collection industry research company. An overlooked ticket or forgotten library book thus can become a collection account on your credit reports, tanking your credit scores and perhaps leading to higher interest rates.

* More than $32 billion of unclaimed property is sitting in U.S. treasurers' escheat offices, waiting for the owners of about 117 million abandoned accounts to claim the money. The accounts range from utility security deposits to life insurance payouts to the contents of safe-deposit boxes (although items of value may be sold and only the money kept; paperwork without commercial value, such as birth certificates and photos, may be shredded).

Not every dollar of these costs is due to lack of organization, granted. But failing to have good systems for dealing with our lives and possessions means many of us end up paying money we shouldn't or simply leaving money on the table.

Paying the price in time and hassle
The costs don't have to be big to be annoying. Christina Brodbeck of Grand Terrace, Calif., spent 20 minutes one morning searching for her 6-year-old son's missing shoe. He'd outgrown his other footwear and was down to one pair that could be worn to school.

"All we had were flip-flops, which are banned at school," Brodbeck confessed. "So, we had to go to the store to buy him a pair of tennis shoes that were proper for school. . . . It was an ugly morning. The kids were late for school (and) I was late for work."

The great thing is that Brodbeck learned something from the experience and changed how her household works.

"Now shoes come off at the front door and go into a bin right beside the door," Brodbeck said. "We also have a backup pair now as well."

In our household, the great clutter catastrophe was missing library books. I spent a small fortune in late fees and replacement costs for children's books that disappeared, sometimes permanently, before developing a system where borrowed books "live" in a canvas bag. The bag doesn't get taken out of the house unless it's on the way back to the library. That worked great -- until I checked out two books for myself, without the bag, and promptly left them on a city bus.

My bus slip-up illustrates what organizer Leist says: It's not enough to set up systems and organize your stuff. You have to maintain those systems -- or create systems that maintain themselves.

Such as automatic banking. Emily Stanley Halla of Wakefield, R.I., said she avoids late fees by having most of her bills auto-debited from her bank account. If you're squeamish about giving a biller direct access to your money, you often can opt to have the bill charged to a credit card.

Bing!

• Where can I find financial counselling?

The system that Bethany Thurman Leslie of Kansas City, Mo., has worked out is pretty simple as well: She avoids procrastination. "I pay my bills the day they come in the mail, put laundry away as soon as I take it out of the dryer, put stuff where it goes as soon as I get home from a shopping trip or the library -- so I don't have time to lose things or forget them!"

Karri Doxtad-Wilde of Sioux City, Iowa, has a "10 things" rule. She uses the four D's (do it, delete it, delay it or delegate it) for sorting mail, papers and stuff. "Then I organize my 'do it' pile from highest priority to least and never let it add up to more than 10 things," Doxtad-Wilde wrote. "This seems to work fairly well."

Four keys to getting organized
If you're ready to lower the costs of disorganization and clutter, professional organizers and productivity experts have some tips:

Make the time. Leist warns against waiting until you "find the time" to tackle organization chores. "Make the time, because you're never going to find the time," she said.

Oh, and expect whatever you're organizing to take longer than you think: "If you think it's going to take two hours, it's going to take four or six," Leist said. "Multiply your estimate by two or three."

Tackle first what bugs you the most. This suggestion from organization expert Julie Morgenstern, the author of "Organizing From the Inside Out," allows you to get a sense of accomplishment by fixing a top-of-mind problem.

Don't rely on your brain. Productivity guru David Allen, the author of "Getting Things Done," warns that our brains are poorly structured for remembering lengthy to-do lists and multiple due dates. Our brains will bug us over and over about certain unfinished tasks but won't necessarily remind us in time to pay the light bill, for example. So it's important to set up reminders that actually work, such as e-mail and text alerts. If your phone has a timer, you can set it after you feed a parking meter to remind you to get back before it expires.

Get help. There are books and blogs galore on organizing, many of which are extremely helpful -- although, like anything else, too many can add to your clutter and/or procrastination issues. But if you're really stuck, paying for a professional organizer can help. If such a consultation results in fewer costs from late fees, storage facilities and duplicate purchases, it may even pay for itself.

Household debt reaches worrisome levels

The following article was written by Julian Beltrane of the Canadian Press, and published online at www.msn.ca on September 15, 2010. It is a grim reminder to many of us of the harsh reality many Canadians live beyond their means - bolstered only by access to credit. A day of reckoning will come for many. 

OTTAWA - Canadians are taking on too much debt, with potentially serious consequences for both their own finances and the Canadian economy.

The warning from economists and a leading global think-tank comes amid fresh evidence that floor-low interest rates the past two years have induced households to borrow more than they may be able to comfortably afford.

Even Canadians instinctively seem to sense their vulnerability.

A new survey reveals that 81 per cent said that if they won $1 million in the lottery their first thought wouldn't be what new shiny car they could buy, but paying off debts.

"People are worried that interest rates are going to increase because, once that happens, their debt loads are going to get bigger," said Cindy Forget, chairman of the Canadian Payroll Association, which did the poll.

More to the point, the new survey found that 59 per cent of employees said they were living from paycheque to paycheque, and that about half put aside only five per cent, or even less, of net income in savings.

The Bank of Canada began driving down interest rates more than two years ago — eventually setting the trendsetting policy rate at the hyper-low level of 0.25 per cent — to stimulate a faltering economy.

But now analysts say the good medicine is becoming toxic, which is why bank governor Mark Carney appears determined to continue hiking interest rates — the last increase coming last week — despite a hard-braking economy.

Lured by low mortgage interest rates, Canadians have been borrowing and buying homes at an unsustainable rate, the Paris-based Organization for Economic Co-operation and Development said Monday.

"[But] this situation is bound to change as the Bank of Canada withdraws monetary stimulus and longer-term rates move up in response," the think-tank said. "In any case, household debt credit needs to slow down, which may well moderate private spending and residential investment in the coming quarters."

• The caution was released before Statistics Canada issued its latest report on household worth showing Canadians got slightly poorer in the second quarter, the first such reversal since the recession.

The agency found household net worth fell for the first time in a year in the second quarter, mainly due to lower stock prices. Net worth declined by $34 million to $5.9 trillion in the April-to-June quarter, a period when the Toronto Stock Exchange index declined almost 6.2 per cent.

On the plus side, the key debt-to-income ratio fell from a record 148 per cent to 145.7 per cent, while the debt-service ratio fell to a four-year low of 7.2 per cent. But that may well be a temporary improvement doomed to be reversed in the third quarter.

Reached in Toronto, federal Finance Minister Jim Flaherty said market pressures have already caused a softening in Canada's housing market, but if the government has to do more to curb overborrowing, it will.

"Rates are much more likely to go up than go down in the future and they [Canadians] have to make sure they can afford to pay the monthly payments on their mortgages," he said.

The new data is illustrative of both the ability of Canadians to carry large levels of debt, for now, and their vulnerability in the future.

The main danger is not so much that Canadians will be unable to meet their debt obligations — although some could be driven into insolvency, said Scotiabank economist Derek Holt.

But if Canadians are tapped out just trying to pay interest and principle on debt, they won't spend on consumer items, thereby slowing economic growth.

That's what happened to Canadian governments in the 1980s and first half of the 1990s when they were running up huge deficits.

"Household debt has moved in to vacate the space left by once heavily leveraged Canadian governments and corporations," he noted.

"I think the issue is significant enough to cause concern that Canada is frittering away many of the hard won advantages that have been created in repairing public and corporate finances over the past twenty years."

TD Bank economist Diana Petramala cautions that the near future is not rosy in terms of debt and net worth.

Debt ratios have been rising sharply since 2007, and even the second quarter's slight decrease appears temporary, a result of a 15 per cent annualized surge in tax refunds.

Meanwhile, any improvement in stock market performance will likely be more than offset by the 3.7 per cent decline in house values since April, which are expected to fall further.

"Weak asset growth in combination with still strong liability growth will likely have households feeling buried under more debt than they ever have," Petramala said.

By Julian Beltrame, The Canadian Press, thecanadianpress.com, September 15, 2010