Ask the Expert!

Welcome to CARP Action Online’s newest feature: Ask an Expert! The first expert we will introduce is Nancy Woods, an Associate Portfolio Manager and Investment Advisor who works for RBC Dominion Securities. She has agreed to answer your finance questions. Send us your finance questions to [email protected] and they will be forwarded to Nancy. We will post some of the more representative questions and answers. In this week’s column, Nancy provides a step by step guide to getting your finances in order so you can relax in the New Year.

This is the time of year where we reflect on what has happened the past year, what we have accomplished, memories we will cherish and lessons we have learned. Here is a list of ten essential tasks to help you be prepared for the coming year.

1. Check for capital gains declared for the past three taxation years. If you have capital losses this year you may want to crystallize and carry back to offset past capital gains. They can only be carried back three years but can be carried forward indefinitely. You can buy back the same security after waiting thirty days to realize the loss and avoid the “superficial loss” rule.

2. Review your will for suitability to current family dynamics. Also review the ability and choice of your executors. If you have any changes in your family’s situation has changed such as birth of new child, divorce etc you should consider getting a legal opinion to ensure your wishes are still intact.

3. Ask your financial advisor for a print out of the expected cash flow of your portfolio. It is good to know for the coming year what your expected income will be. Also check on your current portfolio’s asset mix. There could be dramatic changes due to the recent market downturn.

4. Find out what your current income total year to date is. It may be worth considering deregistering more from your retirement plan if it does not raise you to a higher tax bracket. You can save these funds in a non-registered account by transferring them out “in kind” (as existing securities) rather than cash if you choose.

5. Check if your interest bearing investments are being held within your retirement plan versus a non-registered account. This will tax shelter the interest that is 100% taxable.

6. Open a tax free savings account (TSFA) for your use starting January 2009. You can tax shelter the growth on a deposit of up to $5000. Future withdrawals are non-taxable.

7. Over the holidays is a good time to discuss your estate intentions with your family and beneficiaries. You don’t have to disclose exact amounts, just your wishes so any concerns can be settled without litigation later on.

8. Make a list of all financial accounts as to where they are held and by whom. This should be kept with a copy of your will for future use by your executor.

9. Review to ensure you have a current and accurate Power of Attorney for your assets and personal care. If you become unable to sign your name or make decisions for yourself you want to be sure that someone capable is able to act on your behalf. Make your appointment with your doctor for your annual check up. Make list of your medications and keep a copy in your wallet for easy reference or emergency.