Tag Archives: financial literacy

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Brooks Financial 2017 Income Tax Changes

What’s New and Revised for the 2017 Personal Income Tax Return?

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The Government of Canada has announced several changes and improvements to personal income tax benefits and credits. The following should be considered for your 2017 personal income tax return:

  1. Those responsible for raising children under 18 years of age may be eligible for the tax-free monthly Canada Child Benefit (CCB) payment, which has replaced the Canada Child Tax Benefit. The Child Disability Benefit and provincial and territorial programs, may be included in the CCB. The National Child Benefit Supplement and the Universal Child Care Benefit have also been replaced.
  2. To qualify for the Northern Residence Deduction, you have to have been a permanent resident in a qualifying zone for a minimum of six months. The Basic and Additional Residency amounts have now been increased to $11 per day.
  3. As an Eligible Educator, you may qualify for a 15% tax credit for teaching supplies purchased in 2017 school year, to a maximum of $1000.

For more information on what’s new for the 2017 income tax season, contact Brooks Financial to discuss filing your 2017 personal income tax.


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Divorce? Not All Assets Are Equal – Tesia Brooks CFP CDFA

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imageNot All Assets are Equal

It is common with separating couples for one spouse to want to keep the family home while the other wants to keep their pension.

I recently worked with a woman going through a divorce after 15 years of marriage.

She had worked part time for the duration of the marriage to enable her to have more time at home with their children. He had continued to grow his career in his corporate position that provided him with a defined benefit pension.

During the separation process, the wife wanted to keep the family home to ensure a stable environment for the children. The husband wanted to keep his pension.

Based on the net property statement (value of all the marital assets minus marital debts including taxes) this scenario saw the wife owing her husband an equalization payment.

When I sat down with her to review the outcome of this scenario she was shocked. She had no idea that she would have to pay him (an equalization payment) as she thought the value of the pension would outweigh the value of the house.

I also showed her what her financial life would look like in the short term and 25 years down the road, based on this scenario.

As it was, the husband would be in a good financial position as his pension assets would continue to grow and provide sufficient cash flow throughout retirement. On the other hand, she would be left with no pension in retirement and would have to sell the house and make major adjustments to her lifestyle

My analysis of the situation brought a major shift in the negotiations toward a divorce settlement.

I ran another scenario removing the equalization payment and reducing the duration for spousal support. We then looked at the possibility of selling the family home with both spouses downsizing their accommodations and splitting the net proceeds of the home and splitting the pension amount.

These various scenarios allowed her to feel confident in the negotiations knowing that she would be comfortable today and her future would be more secure.

In the end, the couple had received sound legal advice through their lawyer while we, as Certified Divorce Financial Analysts provided her with an equally valuable kind of support – neutral and unbiased analysis of her financial situation.

If you are thinking about getting divorced or are already in the process be sure to include a Certified Divorce Financial Analyst on your team, it could save you thousands of dollars!

 

Tesia Brooks CFP® CDFA™ successfully completed the course material for “The Financial Aspects of Divorce”, passed the examinations and was awarded the CDFA™ designation in the spring of 2010. She has a professional financial background that spans 37 years, graduating as a Certified General Accountant in 1991 and being awarded the Certified Financial Planner (CFP®) designation in 1998. Tesia has experienced divorce first hand giving her personal insight and compassion for those who are going through the experience of divorce.


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Why Hire a CDFA – Tesia Brooks CFP CDFA

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Most people don’t go into a marriage or common-law relationship with the idea that one day we will get a divorce. Divorce is about loss of love and trust in your partner, shattered dreams and plans, making adjustments to lifestyle and money and a time of huge emotional turmoil leaving even the savviest lost when it comes to sorting out the family finances. Divorce happens in a very high percentage of relationships. If you are going through a divorce you need all the help you can get moving through the painful process of separation. Your team of professionals should include a Certified Divorce Financial Analyst (CDFA™) who will assist you in:

  • gathering the necessary documents required for financial disclosure
  • a financial analysis of your assets, liabilities, incomes and child and spousal support payments, taking into consideration inflation and changing tax consequences
  • articulating your needs and hopes for the future
  • gaining insight with respect to your pension plans, RRSPs, investments and insurance options, including the need for ongoing protection
  • understanding the tax and other financial consequences of keeping or giving up certain assets
  • developing realistic budgets for today and into the future
  • gaining insight into various settlement options and how those options will impact you today, during your pre-retirement years and through your retirement years

If you are thinking about getting divorced or are already in the process be sure to include a Certified Divorce Financial Analyst on your team, it could save you thousands of dollars!   Tesia Brooks CFP® CDFA™ successfully completed the course material for “The Financial Aspects of Divorce”, passed the examinations and was awarded the CDFA™ designation in the spring of 2010. She has a professional financial background that spans 37 years, graduating as a Certified General Accountant in 1991 and being awarded the Certified Financial Planner (CFP®) designation in 1998. Tesia has experienced divorce first hand giving her personal insight and compassion for those who are going through the experience of divorce.


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What is a CDFA? – Tesia Brooks CFP CDFA

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There is a new kid on the block in the world of professional designations. That new kid is called a Certified Divorce Financial Analyst (CDFA™). Many lawyers, mediators, and separated individuals are now seeking the services of a CDFA™.

100% of divorces involve financial settlements.

To keep costs down and to preserve the family’s finances, individuals and couples began to look outside the legal system for help navigating their divorce. Lawyers know the law, but Financial Professionals realize the need for specialized training bringing their expertise to the divorce table. A CFDA™ brings financial clarity, creativity, and confidence into the conversation as she helps you navigate through a divorce settlement.

So how does one become a CDFA?

Currently, there are two financial divorce professional associations that provide training in Canada:

  • The Institute for Divorce Financial Analysts (IDFA™) offers the Certified Divorce Financial Analyst (CDFA™) designation
  • The Academy of Financial Divorce Specialists (AFDS) offers the Financial Divorce Specialist (FDS) designation

Both institutions have prerequisites requiring their students to have a financial background and hold a designation such as a Certified Financial Planner (CFP),  Certified General Accountant (CGA ) or a Chartered Accountant (CA).

A person entering into the CDFA™ program is required to have a minimum of three years’ experience in the financial services, accounting or family law profession. There is also a requirement for ongoing Continuing Education and adherence to a Code of Ethics.

The IDFA™ offers a course called “The Financial Aspects of Divorce” that provides comprehensive training using a variety of knowledge and skill-building techniques. In order to receive the CDFA™ designation, a financial professional must complete three separate self-study modules and successfully pass an exam based on the material for each module. This provides candidates with a comprehensive foundation of practical knowledge on topics such as:

  • Separate vs. marital property
  • Valuing and dividing property
  • Debt, credit, and bankruptcy
  • Child and spousal support
  • Estate planning and insurance issues
  • Retirement plans, pensions, and RRSPs
  • Options for the matrimonial Home
  • Tax problems and solutions
  • Analyzing the financial implications of different divorce settlement proposals
  • Providing litigation support to divorce lawyers
  • Serving as a financial expert on divorce cases

 

 

Tesia Brooks CFP® CDFA™ successfully completed the course material for “The Financial Aspects of Divorce”, passed the examinations and was awarded the CDFA™ designation in the spring of 2010. She has a professional financial background that spans 37 years, graduating as a Certified General Accountant in 1991 and being awarded the Certified Financial Planner (CFP®) designation in 1998. Tesia has experienced divorce first hand giving her personal insight and compassion for those who are going through the experience of divorce.


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Phil’s Learning Curve – Canada Pension Plan

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– Our national public pension plan is the Canada Pension Plan (CPP) which covers everyone except residents in Quebec which, when the CPP was created in 1966 fought and won the right to create it’s own program.

– Thinking about retirement, in a couple years or more? Everyone should know a few basics about pension plans. Public or private they’re important to understand when planning for retirement. I’ll share what I’ve found out about public plans here then go over private pensions in a following blog.

– We also have two national income support programs “Old Age Security” and Guaranteed Income Supplement”. These by definition are not pensions and I’ll talk about them in another post.

– When the CPP was created the contribution rate was set at 1.8% of our “pensionable earnings” shared equally between employees and employers. Today that contribution rate is 9.9% so in 2011 for example, pensionable earnings were between $3500 and $48,300 a year. At the maximum rate you and your employer each paid $2,217.60 to the plan. (If you were self-employed you paid both employer and employee shares –  $4,435.20) This contribution amount increases every year because of indexing.

– You can start drawing benefits on the CPP at age 60 or as late as 70 years of age. The longer you delay taking payments the higher the month payment. Indexed to inflation your payments will increase every year.

– In 2011 the maximum benefit for a 65 yr old was $960/month ($11,520/yr). Most Canadians though don’t qualify for the maximum benefit as for some or all of their working lives their income was below the “pensionable earning” ceiling or they didn’t contribute for enough years. (Stay at home parents often don’t contribute while raising families for example.) The average monthly payment in 2011 was $512.38 ($6,148.56/yr). So CPP will replace only a small portion of a working person’s income on retirement, about 24% of the Maximum pensionable earning. If you earned more say $70,000 CPP would only replace 16% of the income lost on retirement.

– While your CPP benefits can begin at age 60 they are “penalized”, in 2012 it was a 31% reduction. (.52%/month prior to reaching age 65) Conversely if you postpone taking benefits your months benefit increases, in 2012 it was by .64% for every month you delay after reaching 65. So if you waited to age seventy (60 months) your CPP income would be increased by 38.4%.

– Apply those numbers to a 2011 retirees at age 60 would receive $614.40 a month ($7,372.80/yr), a 70 yr old retiree applying would receive $1,363.20 a month ($16,358.40/yr) double the benefits by waiting.

– There’s lots of other “wrinkles” built into the CPP and ways in which it can affect your retirement income, both good and bad depending on your individual and family circumstances.  See a Certified Financial Planner, start sooner than later and monitor your plan’s progress regularly. Your most important asset is good retirement income planning.

  My name is Phil and I’m a 59 year old professional who represents a pretty average Canadian worker thinking about retirement. I’ll be the first to say that “I don’t know much, but I am willing to learn”. Follow my posts here as I start the process of becoming “financially literate!”

 

 


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Phil’s Learning Curve – Fiduciaries

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– http://en.wikipedia.org/wiki/Fiduciary

– A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to the other one, who for example has entrusted funds to the fiduciary for safekeeping or investment. Likewise, asset managers—including managers of pension plans, endowments and other tax-exempt assets—are considered fiduciaries under applicable statutes and laws. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

– To sum it up, a fiduciary is one who has a legal responsibility to place his or her clients’ interests ahead of their own.

– What’s really interesting is that most financial advisors do not have a fiduciary responsibility to their clients! “Most financial advisors are highly ethical individuals, but unfortunately the system in which they work makes it almost impossible for them to put their client’s interests ahead of their own” said Warren McKenzie CEO of Weigh House Investor Services in a guest column for Internet Wealth Builder , “They almost always have a conflict of interest with which to contend. For example, if they always recommended exchange traded funds (ETFs), which do not pay pay an annual trailer fee, over the mutual funds which do they might not earn enough money to stay in business.” (Weigh House, based in Toronto, is certified by the Centre for Fiduciary Excellence, one of the first organizations in Canada to achieve the independent endorsement.)

– According to McKenzie, banks and brokerage firms will oppose the idea of holding advisors to a fiduciary standard as it would force their employees to act in their clients’ interests at the expense of potential profit. Many advisors themselves won’t support the notion as it would require them to complete another level of certification and re-organize how they do business.

– As a Certified Financial Planner, Brooks Financial’s Tesia Brooks does operate under a code of ethics that demands a fiduciary responsibility. Financial Planners Standards Council, (http://www.fpsc.ca)

– My name is Phil and I’m a 59 year old professional who represents a pretty average Canadian worker thinking about retirement. I’ll be the first to say that “I don’t know much, but I am willing to learn”. Follow my posts here as I start the process of becoming “financially literate!”


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Phil’s Learning Curve – Retirement – The Bad News!

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– 38% of Canadians expect to continue working after age 65 because they won’t have enough money to live on!

– We just don’t save enough! In 1990 the average family put aside $8000.00 / year, a 13% savings rate. in 2010 average households set aside $2500.00 / year, a 4.2% rate.

– More debt-to-income ratio soared to 150%, with the average family carrying $100,000.

– According to David Dodge in a study prepared by the C.D. Howe Institute again, Canadians must put aside 10 and 21% of their pre-tax earnings every year for 35 years to maintain lifestyles they are accustomed to in their retirement years.

– Canadians are not “financially literate”.

– Only 51% have a budget…maybe, experts disagree many think that number is overly optimistic.

– 31% of us struggle to pay bills. Those of us planning to buy a house almost half (48%) have only saved 5% of the cost involved, 52% of those do not expect to incur any costs other than the down payment… (lawyers realtors fees etc.)

– 70% of us were fairly to very confident retirement income will provide the standard of living hoped for, yet only 40% had a good idea exactly how much they need to save to maintain their desired lifestyle.

My name is Phil and I’m a 59 year old professional who represents a pretty average Canadian worker thinking about retirement. I’ll be the first to say that “I don’t know much, but I am willing to learn”. Follow my posts here as I start the process of becoming “financially literate!


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