Planning & Advice

• Investments
• Retirement Planning
• Estate Planning
• [Saving]
• Budgeting
• [Unexpected Events]
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Saving for Those Unexpected Events

If anything is certain today, it’s change. Change is everywhere, particularly the relationship between your life and your money. While you can’t control the fact that things will change, you can control how you handle them.

• Death: losing a loved one
• Divorce
• Unemployment
• Personal injuries
• Long-term disability options

Death: losing a loved one

When you lose a loved one, finances are the last thing you want to think about. And that's the way it should be. Take the time to grieve, and know that you don't have to grieve alone. Beyond family and friends, there are counseling services available in most communities to help you through the grieving process. You'll find nearby counseling centres in the Yellow Pages or through your regional portal web site. Or contact your family doctor or local hospital for help.

Planning finances for the living
At some point, though, you'll have to resolve a number of financial issues. If the deceased was a key provider, you may be worried about how the loss of income will affect you and your family. You'll also want to know if there is life insurance and who are the listed beneficiaries of RRSPs and RRIFs. And what about jointly held property and other assets? If no beneficiaries are named, assets may simply become part of the estate.

Resolving the estate
The deceased hopefully has left a valid, up-to-date will and named an executor. If so, your most important first step is to contact the executor, ensuring that the executor is aware of the death. Where there is no will or you've been named executor, contact a lawyer as soon as possible.

Before the will can be executed, a final income tax return must be completed for the deceased. It must account for all the assets of the deceased, and taxes must be paid on any capital gains accrued on those assets. The complexities of a final tax return make it a good idea for you to have a tax accountant complete it. Only after completing a final return and paying taxes can the value of the estate be calculated and the will executed.

Divorce

Emotional stress aside, divorce can be time-consuming and expensive. Children and a jointly owned home or other jointly held assets can make a divorce extremely complicated legally and financially. Even without complications, a divorce can be the source of tremendous grief.

Legal issues

Going to court is one option if you are separating.
In many cases, it's possible for couples to agree on a fair division of assets and to simply leave it at that. But if you and your spouse are unable to agree on a division of assets, you'll need to investigate legal mediation services or to hire lawyers to represent you in court. 

Family law issues are complicated. A lawyer who specializes in this area can provide valuable advice for making important legal decisions that will have a long-term impact on your life. You may also need the services of a tax or financial advisor to help with money matters.

Child custody and child support
If your divorce involves custody rights to children, you're almost certain to require the court's assistance. Before you go to court you may want to contact a provincial Family Justice Centre to resolve disagreements over issues surrounding your children. These centres offer free dispute resolution services to families undergoing separation or divorce.

Money matters
Marriage linked you and your spouse financially. That link will need to be undone so that you can move forward in your separate lives. If you have decided that divorce is the best, or only, option for you, here are some things to consider:

• Analyze your assets: Draw up a list of all your family assets and liabilities. When you have the entire financial picture, then you can consider what’s important to you.
• Open new accounts: You will need to open bank and credit card accounts in you own name. And you may need to work on building your own credit history to qualify for loans or credit cards.
• Change beneficiaries: Once you are divorced, you will need to immediately update your will, insurance, RRSP and other legal documents. Even though you are divorced or legally separated, many documents naming your spouse as a beneficiary remain valid.
• Overhaul your budget: Your monthly income and expenses will likely change. A new budget will help you deal with these realities and may help you negotiate a fair settlement with your spouse. Our budget calculator can help.
• Check your retirement plan: Your long-term financial plans will also need to be reviewed so that you can effectively deal with your new reality.
• Review your insurance: Previous coverage provided by your spouse may no longer be available to you or your children.

Like marriage, a smooth divorce is all about give-and-take. Be reasonable or you risk making the process even more difficult. At the end of the day, a level head and a diplomatic approach will save you time, money and, most of all, grief.

Unemployment

Losing your job for whatever reason can be a serious blow, financially and emotionally, especially if it's unexpected. Then again, it can be a good thing, forcing you to take a fresh look at your career or getting out of a dead-end job.

If you’ve been laid off, here are some ideas for keep your life on an even keel.

• Stay positive: If you’ve been downsized, it’s not a reflection on you. It was a business decision.
• Claim unemployment insurance: You can apply for Employment Insurance (EI) benefits online. It may take as long as 28 days to receive EI benefits, so don't delay. EI benefits are not guaranteed, you must qualify to receive them. If you have questions, contact your local HRSDC office.
• Check your spending: Simply taking stock of what you have and how long you need it to last can prevent you from ending up in serious financial trouble. Our Budget Calculator can help.
• Maintain your insurance: If you had health or other insurance coverage through your employer, you may need to replace. Or join your spouse’s plan.
• Stay busy: Whatever the reason for your job loss, being unemployed is not a vacation. You still have a full-time job: finding a new job.

Things to avoid

• Using consumer debt: The last thing you need is more debt. So avoid using credit cards or consumer debt to maintain your spending levels.
• Dipping into your RRSP: Resist the urge to dip into your RRSP. It’s tempting, but the decision could come back to haunt you.

Long-term disability

Sickness and injury can lay you low despite your best efforts to look after your health and safety. If it happens to you, there are some government plans that provide coverage. But for the most part, you are on your own. Buying insurance is a good way to prevent a financial catastrophe—the price you pay is small compared to the potential financial loss to you and your family.

As with any product─and that’s all insurance is─you want to avoid paying too much or getting poor service when you need it most.

Here are some of the disability insurance options available to you.

Canada Pension Plan coverage
This coverage is free and you may already be eligible for disability benefits. To qualify, you must have contributed to the Canadian Pension Plan (CPP) and have worked for at least four of the last six years. You also must be under age 65 and be considered disabled and unable to work under CPP legislation.

If you've been severely injured or become too sick to continue working, contact Human Resources Development Canada to find out if you're entitled to a disability pension.

Health insurance
Additional health insurance can be vital if you are your household's main provider. More importantly, you must have it in place before you get sick or injured. Waiting until disaster strikes will make insurance costly or may disqualify you from getting insurance at all.

Long-term disability insurance
If you’re working, you should seriously consider long-term disability insurance. It provides a monthly payment to replace your income if you become disabled. Premiums and the benefit amount depend on your age, income, the type of work you do, the definitions of disability, and how long you want the benefits to last after you become disabled.

Government legislation allows for benefits from a disability policy to be taxable or non taxable, depending on the details of the plan or the premium payment option you choose. For instance, if the premiums are fully paid by your employer, proceeds from the disability policy are considered to be a taxable benefit. If you are self-employed, you can opt for a disability policy with non-taxable benefits.

Long-term care insurance
Long-term care insurance helps you pay the costs of long-term health care, within certain limits, if you become unable to take care of yourself. Policies are available to cover an extended stay in a health care facility and even the cost of having a licensed nurse or health care worker treat you in your home.

Critical care insurance
Critical care insurance pays you a non-taxable, cash lump sum if you are diagnosed with certain life-threatening illnesses. The funds are intended to help you pay for the treatments, equipment and other expenses associated with your particular illness. You are free to use the money any way you want.

One of the best things you can do to protect yourself is to stay healthy and to live a healthy lifestyle. It’s also cheaper than buying insurance. But insurance is still a good idea. We can explain your options and make recommendations. What we won't do is try to sell you something you don't need.