As the calendar flips over another year, it should signify a time to do a quick financial & estate check.

The first thing to check is the beneficiaries on your investment accounts, company pensions, and insurance policies. This is something that should be updated whenever something materially changes in your life but, you know how it goes, usually you are too busy experiencing that change to actually do anything at the time. Well, now is the time to verify that everything is set up correctly for the estate goals that you envision. This can make a huge difference if, heaven forbid, something was to happen to you and your beneficiary designations were not set up correctly. It could mean that certain assets get probated (effectively losing around 1.4% to the government) or it could mean that assets get awarded to an ex-spouse or someone else that may not be in your life anymore. It’s fairly simple and only requires a phone call to your HR department / advisor(s).

Next, look at your investments and try to understand how much you are actually paying in annual fees. Every type of managed solution, such as segregated funds, mutual funds and exchange traded funds (ETFs), charge an embedded fee. An embedded fee is one that you don’t actually see on your statement but it comes out of your investment returns. The fee for mutual funds and ETFs is known as a management expense ratio (MER) and can differ vastly from product to product, with costs as low as a few basis points (0.03%) to a few percent per year. If there is a way to save on fees then you are giving your assets a bump up in the annual return that you will experience going forward. While we are on the subject of fees, if your assets are currently being managed by an advisor then make sure that you are getting your fee’s worth of value. Asset management is a dime-a-dozen these days and you can find many lower cost alternatives in the market. I can not stress it enough; the value of an advisor comes in the form of helping you create a vision for your future, showing you how you are going to achieve your vision, and continuing to review if you are on track or if any changes need to be made as time passes and your life changes.

How about maximizing your contributions in certain accounts? If you are maximizing the annual contributions to your Tax Free Savings Account (TFSA) and a child’s Registered Education Savings Plan (RESP) then a new year marks new eligible annual contributions. For 2022, the Government of Canada has allowed an additional $6,000 contribution to TFSAs. For the RESP, the maximum annual contribution to ensure that you are maximizing the Canadian Education Savings Grant is $2,500 per beneficiary (unless you are making up for a previously missed year and then it is $5,000). More information on the RESP can be found on one of my earlier posts, which I have linked to here.

Lastly, to circle back to where this article started, has anything materially changed in your life that would require you to update your Will and/or Power of Attorney? There could have been a death in the family, a falling out, or maybe a new birth. Whatever may have happened, it may not require any changes to your existing estate documents but these documents should be reviewed every couple years to ensure that no changes are required. I know that most people hardly look at these documents after the day they are created at the lawyer’s office so now is your chance.

This checklist doesn’t take much time but it can mean a substantial difference in the outcome of your financial future so take a minute to review the things that I have discussed and it’ll give you piece of mind for another lap around the sun.

Do you have any questions? Email me at info@financerx.ca