2019 Financial "Spring Cleaning" To-Do List

May 06, 2019 | Melissa Clark


With the snow gone and winter coats put away, many of us turn to spring cleaning to declutter our homes. Our finances are no different. These 5 tips will help you and your family reduce paperwork and start the season off on a fresh note.

1. Start de-cluttering with your finances.

  • Start by simplifying your accounts. Consider consolidating with one financial institution and one credit card. Over time we often end up with more than one credit card and/or more than one bank. Reducing to one financial institution will simplify things.
  • Reduce paperwork by setting up online banking, pre-authorized bill payments, electronic funds transfers and eDocuments. Save your filing cabinet and the environment at the same time.

2. Use family income-splitting to reduce taxes.

  • If you and your spouse are in very different tax brackets, consider ways to split income. One strategy is the Prescribed Rate Loan strategy, by which you loan money to a low-income family member who then uses the money to invest.
  • You can also transfer income by gifting money to family members aged 18+ to contribute to their TFSAs.

3. Make your debt “smart”.

  • Review your debt to determine if any of the interest is tax-deductible or if you can restructure our loans and assets to reduce interest costs or make the interest tax-deductible.

4. Check that your Will and power of attorney (POA) are current.

  • Even if you have a will, it could be out of date or overly simple, potentially resulting in higher taxes and family disharmony. Book an appointment with an estate lawyer to get an up-to-date will and Power of Attorney for both medical and financial affairs. There is likely a higher probability of becoming disabled than dying before 65.
  • Remember – marriage nullifies a will in Ontario and divorce does not. If either life change has occurred, it is time to revise your will.

5. Establish appropriate account structures and beneficiary designations.

  • List all of your accounts, including any through your employer and ask yourself “How is this account legally owned?” and “Who is the beneficiary?” Joint ownership with your spouse may reduce probate tax payable on death. However, joint ownership may not always be appropriate. If you are in a second marriage, you may not want assets to flow directly to your spouse upon your death but rather go to your children from your first marriage.
  • Review accounts which permit beneficiary designations (pensions, RRSPs, RRIFs, LIRAs, LIFs, TFSAs and insurance policies). Are the beneficiary designations current?

If you would like more information on any of these topics, please reach out to us. We would be happy to discuss your personal situation.