Review your finances for a new beginning

Another year has passed us by, with all the New Year resolutions going on now is a good time to review your finances and set “New Beginnings” for your financial and estate planning.

If you are not sure how to review your finances, here are some key items to consider:

Prepare or update your Will

Recently a Commercial Real Estate Broker was telling me of some of the problems he has encountered from people passing away without a will.  Did you know that if you die “Intestate” (without a valid will)  it can take 18 months and many heartaches to settle an estate.  He told me a story of a client whom at age 50 passed away from a sudden massive heart attack.  Of course he had not planned to die so young; there was no will.  After 18 months of working with the family and the lawyers he was able to sell the property for the family.  In chatting with one of the men involved in assisting with settling the estate it came to surface that this man had never had a will done either!  I have found that it is very common to find people don’t have a will or have an old outdated will.

Related article:  12 consequences of dying without a will

Review your Life Insurance Policies

Planning CheckmarkMost Life Insurance Companies send an annual statement with a review of the details of your policy.  Call your life  insurance agent or financial planner and ask for a review look at these key points:

  1. Primary Beneficiary (this is the person that will be paid the proceeds)
  2. Contingent Beneficiaries – (the person/persons that will get the money should the primary beneficiary also pass away).  Many policies I review never had Contingent Beneficiaries set up, it is important to do this especially for a couple with children.  The reason this is important is that sometimes both parents pass away at the same time, the money from the policy will be needed to take care of the children.  This will keep the proceeds from being tied up in the estate and pays it directly to the children/Trustee.
  3. Trustee  – check that there is a Trustee in place fro any minors – if you are unsure who you want as Trustee, just put down a family member or friend.  In the future if you change your mind you can easily change your trustee by submitting a signed form to the life insurance company. Also be sure to tell your Trustee they are on the policy and also where the policy is and what insurance company it is with.  Even better introduce them to your life insurance/financial planner.
  4. Needs Analysis – completed (this should be done at least every 5 years) A Needs Analysis is a review of all your debts, assets, and any survivor income needed as well as any capitol gains or tax issues there may be upon your death.

Related article:  Life insurance is the foundation of your financial life

Review your Investments

This is the time of year when many people know they need to take the time to review their investment and savings plans.

  1. RRSP – Do you need to do make RRSP contributions?   We are fortunate that we have until the end of February to review our income tax situation and make any additional contributions we may require to reduce our taxes payable or create a tax refund.  Remember that your advisor needs to see your Tax Assessment form and your final pay slip or T4 slip in order to determine if you can benefit from additional contributions.
  2. TFSA – RESP – After January 1st each year you have new contribution room for your government plans such as TFSA plans, RESP plans and other investment plans. Included in your review should be any repayments that are due for Home Ownership Plans.

Related article:  How to review your investment portfolio?

Review your Home and Auto Insurance Policies

This is also a good time to review your policies and be sure you have the coverage you need or add any additional coverages for purchases or renovations you made throughout the past year.  Call your broker for a review if you do not hear from them.

I find most people are much less stressed once they know they have their financial/estate plans in order. This is just a brief outline of some of the things you should put on your priority list when you review your finances each January and get on track for your “New Beginnings” and prosperous Happy 2013.

Written by Cathy Leahy

Cathy Leahy is the author of Keystone Diaries – Money Keys a financial literacy book for children. She has been working in the Financial Services Industry since April 2000 and volunteers her time with Junior Achievement and The Rotary Club working with high school students.

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