Tag Archives: baby boomers

Who gets what in a blended family with no will?

Q: What happens if I die, was previously married and had a will—but am now remarried (blended family) and have not written a new will? What happens to my estate if I die? How is it divided? Does my new spouse get all the assets? Or is it split between all children (his and mine)? Or do just my own children and spouse inherit everything? Or just my children?

—Donna

A: Donna, You ask, “What happens to your blended family if you die?”

The simple answer is that no one knows. No one can give you an answer without knowing your specific circumstances. You cannot get simple answers to comfort you. I’m not trying to scare you, but you need to get advice.

There are so many variables that determine who shares in your assets. Here are some variables that only involve children when parents die:

Minor Children Suffer Most

  • What are the ages of all children (his and yours)?
  • Are you supporting any children?
  • Are any children financially dependent?
  • Do you need guardians for children who are minors?
  • Should trusts be set up to invest minor’s inheritances?
  • Is any child on government assistance?
  • Should discretionary trusts be used for spendthrift children?
  • Do estranged children have claims to your estate?
  • Did you promise to pay for their children’s education or wedding?

You can protect minors with a will and estate plan.

Government Rules May Divide Your Estate

What happens if you don’t take the time to prepare an estate plan?

The government has a will for you that cannot be varied.

Governments have rules to divide your estate among your next of kin. These rigid rules are not flexible. These rules dictate who controls your money and who is your executor. They also decide who gets what and when.

What about Spouses and Wills?

Another set of variables applies to your spouse.

  • What if your new spouse has more wealth than you?
  • Should your money go to your spouse or your children?
  • What if your spouse requires a full-time personal service worker?

You Need to Reduce Taxes

Government tax rules apply if you have no will. As you can imagine, the government does not give you any tax breaks. You will pay the maximum in income and probate taxes.

You cannot use any tax deferrals or tax reduction options. You need to learn how to designate some assets like tax-free savings accounts and registered plans. You may need to protect your assets from creditors or prior spouses.

All of these variables affect what your family receives if you die. These examples do not consider lawsuits from prior spouses. All lawsuits waste your money and incur legal costs and delays. Lawsuits also destroy families and wipe out estates.

Estate Planning Can Avoid Lawsuits

You need to consider tax, estate and family laws. You need good professional advice to get it right.

Remember: estate planning is what you do for the people you leave behind.

If you love your family, find the time and write a will.

Source: Moneysense.ca – by  

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What’s his, what’s hers

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When divorcing partners divide their assets, the split isn’t always as fair as it first appears. Here’s what you need to know.

Two weeks after his divorce, Phil Doughty received a blunt letter from his ex-wife’s lawyer. It informed him he’d contravened his settlement by not giving his ex her $100,000 share of his pension within 10 days of the divorce.

“It was a knockdown punch,” says the retired teacher from Montreal. “I had no idea I had to pay her right away, or that the money would come directly out of my pension fund.” Doughty thought his ex would simply get a share of his benefit after he stopped working. “I’d never heard of a company taking money out of a pension eight years before retirement.”

With his pension fund depleted, Doughty’s monthly cheques were reduced by over a third when he eventually retired, yet he was still required to pay spousal support from what remained, leaving him strapped. “I had to find another lawyer to help me get out of those support payments I couldn’t afford anymore.”

Doughty (we’ve changed his name, and those of all the featured subjects in this article) believes his pension arrangement should have been handled differently—at the very least it should have been explained to him properly. “I guess it was just something the lawyers worked out between them,” he says. “My lawyer and I never really talked about the pension.”

It seems hard to believe a lawyer would not talk to a client about how such an important asset would be divided, but Doughty insists he would have remembered such a conversation. His situation is just one example of how partners frequently get divorced without understanding all the financial implications.

“Divorce changes a person’s financial situation dramatically and often there is no planning for it,” says Debbie Hartzman, a Certified Divorce Financial Analyst in Kingston, Ont., and co-author of Divorce Isn’t Easy, But It Can Be Fair. (CDFAs are planners with additional training in the financial impact of separation and divorce. See “Where to get help,” at the bottom of this page.) “I’ve had clients say things like, ‘I just spent four years fighting with my ex, I have this cheque for $400,000, and I have no idea what that means in terms of my financial future.’”

Surely part of a lawyer’s job entails discussing financial matters surrounding divorce. Apart from custody of children, aren’t money and property the big issues in divorce? “A family lawyer’s job includes giving advice about a number of financial issues, but we are not financial analysts,” says Bruce Clark, who observed many divorce-related financial problems during his 35-year career as a family lawyer in Toronto.

Lawyers may not anticipate the long-term implications of divorce-related financial matters. For example, Hartzman explains it’s possible to have different divisions of assets that all meet the 50/50 requirements of the law but have profoundly different financial consequences for the divorcing partners. Her book includes a case study that presents different ways to legally divide the assets of a middle-class couple. Both are 58 years old, and the largest assets are the house and pensions (his is four times more valuable than hers). In one scenario, the assets are split more or less equally, so the initial net worth of the two partners is about the same. However, her share of the man’s pension is paid out as a lump sum, and the support payments are not structured to reflect the fact his post-retirement income will be higher than hers. As a result, after age 65 the woman’s net worth and monthly cash flow flatline, while the man’s relative financial situation steadily improves. “The person with the pension can end up in a much better financial position than the person with the house, particularly if the pension is indexed to inflation,” says Jim Doyle, a CDFA with Investors Group in Vancouver.

Here’s a different scenario: she keeps the house and gets only a quarter of his pension. To the untrained eye that seems to be simply an alternative way of dividing the pie equally. Yet this arrangement ensures the woman’s net worth stays similar to the man’s for the rest of their lives, without diminishing his financial situation.

Of course, case studies do not translate into rules that ensure ideal financial arrangements for every divorcing couple. That’s why it’s a good idea to consult a financial professional as well as a lawyer if you’re going through divorce or separation.

Don’t assume every asset must be split down the middle. “People often want to split up each individual asset, but not all assets are created equal. It’s usually better to look at assets in terms of how to divide the whole cake,” says Hartzman.

Pinched pensions

Doughty is not the first divorced person to be subject to pension shock. Many people don’t even realize pensions have to be shared after divorce, says Clark. “In my experience, most people consider their pensions to be their personal property, as opposed to an asset that must be shared equally after a divorce. In a longer-term marriage the pension is often the single biggest asset.”

This was the case for Doughty and his ex-wife, who had sold their matrimonial home shortly before separating. By law his ex-wife was entitled to half the teacher’s pension that accumulated during their marriage.

“Pensions are very, very complicated assets,” says Sharon Numerow, a CDFA and divorce mediator with Alberta Divorce Finances in Calgary. “Defined benefit pensions must be independently valued by an actuary, and the rules about paying out a spouse vary from province to province.” For example, in Alberta there are no longer any provincial pension plans that allow monthly payouts to an ex-spouse when the member spouse retires. Therefore, the only option is to give the ex-spouse a designated value that is transferred into a Locked-In Retirement Account or LIRA (called a locked-in RRSP in some provinces). “This almost always has to be done after the separation agreement is signed, and not usually at retirement,” says Numerow.

On the other hand, Ontario recently adjusted its Family Statute Law in the opposite direction. Now a portion of a person’s pension payments can be made directly to an ex-spouse after retirement. Another possibility is for the spouse without the pension to get another asset equal to the value.

Bottom line, don’t underestimate the potential for misunderstanding pension division. It’s important to work with your lawyer to understand the legal issues, then talk to a financial planner who can help you appreciate the short-, medium- and long-term implications of the division of this and your other assets.

Close to home

Another key, says Hartzman, is determining whether it’s viable for one partner to stay in the family home. There are two main questions: Can one partner actually afford to keep the home? And how will keeping the home affect that person’s financial future?

“Most people I’ve worked with live in houses that require two incomes, so after divorce one person would be trying to maintain the home on half as much income, and often it just isn’t affordable,” Hartzman says. “Can you imagine how hard it is to tell someone already going through the emotional turmoil of divorce that they can’t afford to stay in the family home they and their children are so attached to?”

Sandra Baron, an Ottawa mother of two, did manage to stay in the matrimonial home after her divorce. A financial planner helped her figure out how to pull this off. “My first lawyer really didn’t seem to understand my financial situation,” Baron explains. “I went to see a financial planner and asked if I could afford to buy out the matrimonial home from my husband. He helped me work it out.”

Baron and her spouse had always lived within their means. They had no debt other than a mortgage with much lower principal than they qualified for. That, combined with support payments and Baron’s earning potential (she had been an at-home parent most of her marriage but began doing contract work after the divorce), meant she was able to keep the family home.

The financial planner also gave Baron some tax-saving advice on how to invest some money she had brought into the marriage. Since she had that money before the marriage and kept it in a separate account, it was not an asset that had to be shared equally. However, had she used that money to help pay down the mortgage, it would have become part of the value of the matrimonial home and therefore a joint asset.

This is also the case if one spouse receives an inheritance or gift during the marriage. In most provinces, as long as the money is kept in a separate account it does not have to be divided equally after a divorce. But if it is used to purchase a joint asset, such as a house, it becomes the property of both spouses. (In some jurisdictions growth in the value of the inheritance or gift may count as an asset to be shared.)

Perhaps the biggest factor in Baron’s situation was that she and her husband actually saved money for their separation. “It was almost five years from the time we realized the marriage was likely not able to be repaired that we saved for the eventual separation. Unless the relationship was harmful, I felt it was in the best interest of everyone—particularly the children, who are all that really mattered in the end—to plan and wait so things would be better for them financially.”

It’s a safe bet the path Baron and her ex-husband took is not typical of divorcing couples. Obviously they got along well, even after deciding to separate; they had no debts other than the mortgage and were both well acquainted with their family financial situation. The opposite is much more likely, says Numerow. “It’s common for one partner to know very little about the family finances, and they often don’t know the extent of their debts.”

Lady in red

When Anna Masters, of Taber, Alta., separated from her husband she moved in with her sister and started a new job at a bank. She also applied for a new credit card through that bank, so the person doing the credit check was one of her colleagues. When the Equifax credit report came through, the coworker quietly asked Masters to step into her office. “You are behind in all your bills and credit cards. Most of them are in collections,” the embarrassed colleague said.

“I was horrified,” says Masters. “Even the cell phone bills weren’t paid. I didn’t even know my ex had his own cell phone.”

That’s not the worst of it. Masters’ ex-husband had a line of credit she didn’t know about it, which listed her as a co-signer. Masters says he must have forged her signature on the application.

It’s not hard to find similar tales of woe. Alan Leclair of Winnipeg tried to remortgage his house not long before he and his wife split up. “When the credit check came in the banker said to me, ‘You’ve got debts you didn’t tell me about. You’d better go home and talk to your wife about it,’” says Leclair. These debts were considerable—between $30,000 and $40,000 in unpaid credit card balances. Fortunately, Leclair’s ex-wife eventually agreed to take responsibility for them.

Masters was less fortunate. She got stuck with a big chunk of debt—loans and credit cards her husband was supposed to pay off, but didn’t—as well as the line of credit he’d fraudulently put her name on. “I could only get part-time work at the bank, but I worked every other junk job I could find. It took me three years, but I paid off my share, and in a way I’m glad I went through the experience. I’m in control of my finances now,” Masters says.

The one smart thing Masters feels she did in the lead-up to her separation was to start setting aside money (“Omigod money,” she called it) so she’d have something to fall back on in an emergency. “Even before I realized the full extent of the financial mess we were in, I knew my ex was spending irresponsibly, so I started squirreling money away.” That money—about $3,500, which she kept in a sock hidden under a pile of towels in the linen closet—ended up being used to cover her living expenses during a spell of unemployment after moving to a new town after she was separated.

Leclair did something similar. “I had a friend who was going through a divorce and I asked him for advice. He said, ‘Put a few bucks away.’ So I did.” He hid cash in his house and even left about $500 at a friend’s house. “When the separation happened I was in scramble mode, dealing with all kinds of things. It was comforting to at least know that money was there,” he says.

Clark, the family lawyer, explains any money you stash prior to separation “will still be subject to division, but you will have the use of it while property issues are being sorted out. There is nothing illegal about this as long as you declare the amounts you have put aside.”

Other eye-openers

It’s hardly surprising that people have trouble working through issues like asset division and debt. But the path to divorce is laden with other potential financial mistakes.

One is trying to settle too fast. “People want it settled tomorrow,” says Jim Doyle, the financial planner. “Emotions often determine the choices rather than making the numbers make sense. I say to people, ‘Let’s slow down and do the math.’” He says it’s common for partners to make hasty, ill-advised decisions about asset splitting just to avoid conflict. “Sometimes in relationships where there is an imbalance of power, one person might simply capitulate, resulting in a financial decision that may have negative consequences down the road.”

Don’t ignore the tax implications. “One of the biggest items that is often overlooked in separation and divorce agreements is tax deductions, such as child-care expenses, and credits that may apply to separated and divorced parents,” says Numerow. For example, a divorced parent can claim one child as a dependent, but both parents cannot claim the same child.

Another dangerous road is trading property for time with children. “Big mistake—just don’t do it,” says Numerow. In addition, remember that spousal or child support and asset division are, for the most part, completely separate issues.

Finally, if you’re a common-law spouse, don’t assume the process is the same as it is for married couples. Generally, legal requirements regarding spousal and child support are the same, provided a couple has been living common-law for at least two years (three in some provinces). However, the division of assets is not automatic, as it is in a marriage, which comes as a surprise to many people, Numerow says. “Go to a lawyer and find out what you do and don’t have to share. Laws concerning common-law separations vary by province.”

One message Clark, Numerow and Hartzman all want to get across is this: both partners should always be aware of the family’s financial situation. If one partner is more hands-on with the money, the other at least needs to understand the big picture. “I’ve met a lot of spouses who weren’t involved in the finances and they’re ashamed,” says Numerow. “I tell them, ‘Don’t beat yourself up over it. Now is the time to begin your learning.’ However, if both partners were on top of the family finances it would make divorce a lot easier.”—written by John Hoffman

Where to get help

Certified Divorce Financial Analysts usually charge between $175 and $250 per hour. “If people do their homework and bring in all the relevant financial information, we can usually get a fairly good handle on the situation in two hours,” says CDFA and author Debbie Hartzman. “For an individual, it usually takes no more than three hours overall. With couples it usually takes three sessions of an hour or an hour-and-a-half each.” She notes that a better understanding of your financial situation can save your lawyer’s time, which is much more expensive.

To find a CDFA, do a web search for your town and CDFA, or visit the website of the Institute for Divorce Financial Analysts (www.institutedfa.com) and search by city, town or area code.

Source: MoneySense.ca – by  

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Retirees find financial freedom in renting after selling their homes

William Jack and Mary Taylor sold their home two years ago, but they didn't buy a condo. Instead, like a growing number of people downsizing, they rented a place.

A growing number of homeowners are unlocking the equity in their houses, by selling and moving into a rental.

William Jack woke up in the middle of the night last month as he often does. This time, though, he rolled over and went back to sleep.

That’s when he knew that after more than two years of turmoil, he was finally home. The fact that the roof over his head belongs to someone else only added to his peace of mind.

William and his wife, Mary Taylor, are among a growing number of Toronto area downsizers, who are choosing to rent rather than buy a retirement nest. It is a choice, they say, that can be physically, mentally and financially liberating.

The couple — he’s 71, she’s 69 — are healthy, vibrant people. But a couple of years ago, their two-storey home of 32 years with its reverse ravine lot was “just consuming too much time and it was absorbing huge amounts of energy that we wanted to use in other ways,” said William.

“There were rooms we didn’t go into,” said Mary.

“We watched both our parents go through this downsizing exercise. I swore I would never do to anyone what my parents did to me. It was a nightmare,” said William.

“We wanted to leave while we still could — gracefully,” said Mary.

Royal LePage realtor Desmond Brown helped sell the couple’s east-end home and, in the end, he was the one who helped them find the two-bedroom, 1,800-sq. ft. condo they have been renting near the lake since the fall.

The emotional and financial decision to rent rather than buy is becoming more common, said Brown.

Clients like William and Mary, “have had a really good run by owning their own homes for many years,” he said.

“They’ve accumulated a lot of equity. They have a feeling that the market is going to go back down again and all the benefits of this great market are going to be lost if they don’t cash in,” said Brown.

At the same time, these home sellers can’t necessarily see spending $1 million or more, plus maintenance fees, on a condo.

“Yes, I was incensed when I saw these places for the same amount of money as our house. How could that possibly be,” said Mary.

But, she said, “It doesn’t make sense to rail against the market. That’s the market, so you accept it or not.”

Initially they were open to renting or buying.

“Buying any of the units we looked at would have consumed a huge percentage of our net worth. You don’t want 50-, 60-, 75-, 80 per cent of your net worth in one piece of real estate. It’s just too risky,” said William.

“The price of the condominiums we were looking at went up by $20,000 a month or more,” said Mary.

The couple pays about $4,200 a month in rent. It might sound like a lot but they write only three cheques a month — rent, hydro and cable. When they lived in their house, there were 15 to 20 regular expenses.

Gone, they say, are the bills for a security system, for chimney repairs, sewer connections and maintenance agreements on appliances. Even firewood cost $500 a year.

The condo is the third rental for the couple since they sold their house. The first summer they rented a place in Prince Edward County and then they moved to the west end for a year. But they missed the east end.

“We realized community was much more important than we thought. The cottage was isolated and (the west end) place was so transient you couldn’t have a community,” said Mary.

Now they live in a building where they know other members of their yacht club and they enjoy bird-watching near the lake.

Their apartment is decorated with souvenirs of their travels but there is no granny vibe.

It’s the type of high-end rental that can be difficult to find. Apartment hunting is not particularly lucrative for realtors even if they can find something suitable among the few leases on the Multiple Listings Service.

In the hot Toronto property market, renters are increasingly in the same position as home buyers. They have to compete, sometimes by offering higher rents or cash upfront.

“We were paying $3,750 (in their previous west-end apartment) and when (the owner) listed it on MLS there was a bidding war and she ended up getting $4,500 a month,” said William, an actuary and former IT executive.

Helping clients find a rental is all part of the service Brown provides when he has helped someone sell a home. He found this couple’s condo by word-of-mouth. But he acknowledges the searches can be challenging.

“When you’re spending up to $5,000 you’re going to be picky so finding the right one can take some time,” said Brown.

Mary says they knew they were home as soon as they walked through the door of their condo. But that was after they had looked at a lot of places — many were “appalling,” said William.

Is renting a condo saving them money on a monthly basis?

“Probably not. But it isn’t costing us more,” said William. He says they have taken the proceeds from their home sale and invested the money.

Releasing the equity on your house can actually generate enough cash flow to cover rent, agrees Scott Plaskett, CEO of Ironshield Financial Planning.

For people rich in equity but cash poor, renting can give them the freedom to pay for some of the extra things they want in life. It’s all very well to watch your home’s value appreciate, but you can’t eat a doorknob, he said.

If the decision to rent or buy a smaller home is a financial wash, he advises his clients to go with the better emotional fit. That frequently depends on whether they are comfortable giving up the control of owning their own place or whether they really need the cash to cover the cost of enjoying their retirement.

But Plaskett warns retirees to be aware that the economic environment in which they are investing the equity they have earned on their homes has changed.

“We’ve never really existed in an environment where we’ve had wealth with interest rates this low,” he said.

If you’re going to rent and invest your home’s equity you need to look carefully at where you’re putting that money so you’re not seeing your old age security benefits clawed back.

“Now you have all this money that’s being released from one of the legal tax shelters in Canada into a non-sheltered environment,” said Plaskett.

When their abundant garden became too much to manage, Jane and Bill Martin, 79 and 80, didn’t even consider buying another home.

“We don’t want the responsibility. (With an apartment) you can close the door and go away. We just didn’t want to own again,” said Jane.

Experienced apartment dwellers, the Martins raised their kids in an east end rental.

They only bought their house south of Scarborough General Hospital because an accountant advised it as a wise investment, said Jane.

When it came time to move, it took a couple of months viewing between 15 and 20 apartments (“From the worst on up,” said Jane.)

“The ads look good but when you go and look at the place. . . ” she said. “Most condos you’re talking 700 to 900 sq. ft. That won’t do.”

They found 1,230 sq. ft. with two bedrooms, two bathrooms and two balconies for $1,882 a month near Cummer and Bayview Aves.

The TTC is outside the door and conveniences such as a drug and grocery store, banks and the post office are right there.

They’re not used to the shopping in their new neighbourhood yet. It feels like a long way to big department stores after living five minutes from the Scarborough Town Centre for so many years.

They still go back to their old neighbourhood butcher.

“We had a lot of good friendly neighbours so you miss them,” Jane said. “Every now and again we make a little excursion day and head down there and do some shopping and get some haircuts.”

Downsizing duty

Laurie Bell has been downsizing seniors for five years. Lately, she says, she sees a trend to renting rather than buying among people who can still live independently.

One couple actually rented a condo to see if they would like the lifestyle.

In two other cases the reasons were financial, said Bell, who has a background in mental health and, at one point, even sold real estate.

“When the person’s significant major asset is their house, they’re looking at how they can move, get rid of the maintenance,” she said.

“They just want to know where they stand financially. It’s frightening to look at renting a condo because it might just be for a year.”

More seniors want to maintain their autonomy and avoid relying on their children or other family members.

“They’ve seen it not go well if people do wait too late and there’s been a precipitous incident,” said Bell, whose company is called Moving Seniors with a Smile.

Services like hers take a lot of the physical and emotional stress out of the downsizing process.

There is often 30 or 40 years’ worth of possessions to sort through, which can be emotionally taxing because her clients can’t keep it all.

She also has a coterie of reliable service providers: movers, junk removal companies, even shredders for paper work.

Bell describes it as a three-day process. The first day is spent packing, the second day the client’s belongings get moved and the third day they get the new place set up.

“They can have friends over for cocktails by 5 p.m.”

Source: Toronto Star – Tess Kalinowski

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The myth about warming up your car on a cold day

Since modern cars have fuel-injection systems their engined don’t need to be warmed up. (Stefan Redel, sredel@sredel.de/iStockphoto / Getty Images)

The Stegosaurus disappeared more than 100 million years ago, doomed by its tiny brain and a changing world. Then we come to the carburetor, a crude fuel-mixing device that once ruled the automotive universe.

Today, the carburetor is largely extinct, kicked aside by the modern fuel-injection system. Yet millions of drivers still seem to be stuck in the Jurassic Period. I thought of this recently when I watched a man spend 10 minutes warming up a fuel-injected Toyota that could have been driven seconds after it was started.

Few processes are as poorly understood as the cold-weather start. Back in the days of carburetion, a car couldn’t be driven until it was warmed up. Today, warming-up is a counterproductive exercise that wastes fuel, harms the environment and damages your car. Let’s have a look at the science, history and flawed folklore behind the automotive warm-up:

Virtually every car on the market today is equipped with a fuel-injection system that adjusts gasoline delivery based on temperature, throttle setting and engine load – because of this, your car can be driven almost immediately, even at low temperatures.

Even in extremely low temperatures, most fuel-injected cars can be driven away less than 30 seconds after start-up. The best way to warm an engine is to drive away as soon as possible and keep the load low until it reaches ideal operating temperature. Accelerate gently and use small throttle openings. Driving loads the engine and warms it more quickly than extended idling.

Engines are most efficient when they operate in their optimum temperature range. Running an engine when it’s cold causes increased emissions and engine wear. The goal is to get the engine into its preferred temperature range quickly.

Using a block heater can dramatically reduce the wear on your engine by improving oil flow on initial start-up. According to tests by Environment Canada, a block heater can improve overall fuel economy by as much as 10 per cent – you get zero miles per litre while idling and fuel economy is best at optimum engine temperature, so you should reach the target zone as quickly as possible. Environment Canada tests also showed that warming up an engine with extended idling leads to sharply increased emissions.

Although driving away as soon as possible is optimum, you may be limited by visibility requirements – the defroster system in your car won’t work until the engine generates enough heat. This can be offset by the use of a plug-in interior heater. Some manufacturers offer windshields with embedded heating elements, which speed defrosting.

The science and engineering that govern engine performance are relatively simple. Metal parts expand and contract with temperature and are designed to work best within a specific range. The efficiency of fuel combustion also varies with temperature – a cold engine burns extra fuel.

The catalytic converter unit installed in your car’s exhaust system is less efficient when it’s cold. This is another reason why short warm-up times reduce emissions.

Many drivers base their warm-up practices on outmoded technology and outdated thinking. When cars had carburetors, engine warm-up was essential – trying to drive a carbureted car when it was cold was like waking up a temperamental senior citizen from a deep sleep. Modern fuel injection systems automatically adjust themselves to deliver the correct amount of fuel, and are ready to go almost immediately.

Extended-idle warm-ups were once encouraged due to lubrication technology. Old-school oils didn’t work well in low temperatures. Modern synthetic oils can flow well at temperatures as low as – 40 C.

Use remote starters wisely. Many drivers start their engines far ahead of time so their car will be toasty warm when they get in. This extended idle has a high cost. According to the Oak Ridge National Laboratory (a division of the U.S. Department of Energy), excessive idling shortens the life of your exhaust system and spark plugs because a cold engine creates more damaging combustion byproducts than a warm engine. Carbon and soot buildup also reduces the effective lifespan of engine oil.

Source:  PETER CHENEY The Globe and Mail Published Thursday, Feb. 26, 2015 5:00AM EST

 Read more questions and answers from Peter Cheney and Globe Drive here

Since modern cars have fuel-injection systems their engined don’t need to be warmed up. (Stefan Redel, sredel@sredel.de/iStockphoto / Getty Images)

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Hitched then ditched by marriage ‘predator’

Galina Baron married an elderly man named Charlie Juzumas with a promise he'd never have to go to a nursing home. A judge later said she had "unclean hands" after her son's name was added to the title of Juzumas' house.

Galina Baron, 65, married Charlie Juzumas, 89, with the promise that he’d never have to go to a nursing home. He didn’t know it yet, but he had just become entangled in a predatory marriage.

She promised to be a caring bride who’d keep him out of a nursing home.

When the wedding was done, Galina Baron left her 89-year-old husband at a Toronto subway stop.

Charlie Juzumas took the TTC home, alone. He didn’t know it yet, but he had just become entangled in a predatory marriage.

Juzumas was Baron’s sixth or maybe eighth husband. She had trouble remembering them all, according to a 2012 Ontario Superior Court judgment filed after Juzumas tried to reclaim the house she took from him.

This story is based on Justice Susan Lang’s court judgment, an affidavit and interviews. Baron and her son, Yevgeni, refused to comment.

Juzumas was the husband who got away, but it was a precarious escape.

When Baron married him on Sept. 27, 2007, the 65-year-old bride had been offering caretaking to vulnerable widowers with the expectation of a mention in their will, according to the judgment.

Age was not Juzumas’ weakness. He did yard work, planted flowers and seemed entirely self-sufficient, although he once accepted a tenant’s offer to climb a ladder and remove storm windows. His vulnerability came from a fear of dying in a nursing home.

It’s unclear if Baron knew this when she knocked on his door in 2006. Both were born in Lithuania, 24 years apart. Baron spoke the language of his home country and offered housework.

He was reluctant but she kept coming back. As her visits increased to three times a week, he started to see her as a saviour who’d keep him at home.

Juzumas’ wife, Malvina, died a decade earlier and they had no children, but his memories lived in this house. It was a three-storey Victorian, with stained-glass windows near the west Toronto neighbourhood of Beaconsfield.

Baron pushed for marriage, saying she merely wanted a widow’s pension. She clinched the deal by promising he’d never go to a nursing home.

The day before they married, Baron and Juzumas went to see a lawyer named Stan Mamak in the Roncesvalles neighbourhood. The court judgment detailed Mamak’s actions.

In a recent interview, Mamak said he did his best to independently represent Juzumas’ interests and believed the elderly man was a willing participant. “Just because someone is old doesn’t mean they are infirm,” he said.

Without meeting Juzumas separately to ask his wishes, Mamak wrote a will making Baron the sole executor and beneficiary of his estate, the judgment found.

Baron never did move in, but she spent her daytime visits berating him, according to witness testimony, the judgment said. She got joint access to his bank account. He paid her $800 a month for housekeeping and she took all but $100 of his tenants’ $1,300 monthly rent, said the judgment, which found Baron had “unclean hands.”

According to her affidavit, his new tenant, Pamela Detlor, studied Juzumas’ reaction to Baron. The moment Baron marched through his front door, Juzumas’ shoulders slumped, Detlor said. He was so afraid to speak that she initially thought he was mute. Later, he’d confide his troubles in Detlor saying, “I am a stupid old man,” according to the judgment.

Two years after the wedding, Juzumas realized he’d made a mistake, both in marriage and in the will that gave Baron his estate. He went to a different lawyer who wrote a new will. (The judgment doesn’t say why he didn’t choose Mamak, the original lawyer who wrote the first will of their marriage.) Baron would now inherit $10,000. The rest was bequeathed to his niece in Lithuania. The bulk of his estate came from his home, worth roughly $600,000 in 2009.

Baron soon discovered this act of rebellion. She went to see Mamak. The judgment states that Mamak believed it was Baron who was the victim, a “wronged, vulnerable spouse/caregiver.”

Mamak told the Star that Baron described Juzumas as a violent man, saying she claimed he threatened to cut her in half with a sword.

“In retrospect, I feel she was probably trying to manipulate my image of her — that she was an innocent victim,” Mamak said.

Together, Baron and Mamak came up with the idea to transfer the title of the house to her son, Yevgeni, the judgment found. Mamak said he improved the agreement, letting Juzumas live in the house with his name on title until his death.

A meeting was arranged to add Baron’s son Yevgeni to the house title. That morning, 91-year-old Juzumas ate a bowl of Baron’s soup, becoming “dizzy, as if I’d taken a strong drink,” he later told court.

Tired and disoriented, Juzumas signed the papers, giving away his financial security to a young man he disliked. The judgment later found there was no evidence Mamak spoke to Juzumas without Baron in the room, nor did he tell him the new agreement was “virtually eviscerating” his recent will. (Mamak said he believes he spoke to Juzumas independently but has no notes to prove it.)

When Juzumas learned of Baron’s ruse through a legal followup letter two weeks later, Juzumas’ long-time neighbour, Ferne Sinkins, drove him to the lawyer’s office. Baron arrived a few minutes later, but was told to wait. Juzumas emerged from his meeting with Mamak saying he was told the transfer was “in the computer; it can’t be changed,” the judgment said.

He returned the following week with the same request. Again, Baron appeared — an “unexplained coincidence,” the judge found. (Mamak denied tipping off Baron, saying she was probably following Juzumas.) This time, she demanded a new will and power of attorney over his medical care.

At home, his tenant thought he was “doped up.” His neighbour questioned the large gash on his forehead. Juzumas said he passed out, adding that Baron told him he fell down the stairs. He didn’t want to go to the hospital, fearing he’d be taken to a nursing home. During a rare evening visit, Baron called an ambulance claiming Juzumas was sick. His tenant, Detlor, told the attendants of Baron’s abuse.

Questioned by hospital staff, Baron called Juzumas a violent, pathological liar who should be sent to a nursing home. Instead, staff sent him home where helpful tenant Detlor insisted he change the locks. The day Baron came to get a few possessions left on the porch, Juzumas lay flat on the couch so she couldn’t see him.

Juzumas took his case to court. Baron fought back. The judge gave him a divorce and reversed the transfer of his house, blaming it on Baron and Yevgeni’s “undue influence of a vulnerable elder.”

Two years later, Juzumas sold his home for $910,000 and, neighbours said, returned to Lithuania with his niece.

Source: Toronto Star  Investigative News reporter, Published on Sun Apr 17 2016

Galina Baron married an elderly man named Charlie Juzumas with a promise he'd never have to go to a nursing home. A judge later said she had "unclean hands" after her son's name was added to the title of Juzumas' house.

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Should You Pay for Your Child’s College Education?

College degrees lead to higher pay, greater career options, and — research suggests — longer lifespans. But parents with college-bound children may feel trapped by the skyrocketing costs of education, which can also last a lifetime.

If you pony up, you could risking your retirement. If you don’t, you could be risking your kid’s future.

Indeed, the average graduate leaves school with nearly $30,000 in student debt, a sum that will reduce their future retirement savings by more than $300,000, according to a projection by insurance and financial research group Limra.

Likewise, parents’ retirement savings are also getting put on the line because of skyrocketing costs. Nearly a third of parents in a T. Rowe Price study admitted they’ve made the risky choice of tapping their 401(k) plan to save for their kids’ college.

That’s a shortsighted move, said Sean T. Keating, a certified financial planner in Eatontown, New Jersey.

“You can always borrow money for college, but you can’t borrow money for retirement,” Keating said.

What do you do?

Finding compromise is possible if you plan ahead and follow the right order of operations, said Lazetta Rainey Braxton, a CFP and founder of the wealth advisory firm Financial Fountains.

“Middle income parents need to ensure their own financial stability first,” Braxton said. “It’s like putting on your airplane oxygen mask before you put on your children’s.”

Here are three key questions to ask yourself before you decide to open your wallet wide — or slam it shut.

How much can I afford?

One rule of thumb says that to maintain your standard of living, your savings at retirement should be high enough to replace at least 80 percent of your annual income each year, said Keating. Work backward from that assumption to see how much you can actually spare today, he said, also keeping in mind obligations like your mortgage payments and any other debts.

“You have to be aware of what you’d be sacrificing,” said Erika Safran, a CFP and president of Safran Wealth Advisors in New York. “Will you run out of money at age 75? You must also consider medical expenses and where you will live.”

In fact, many older adults end up forced to retire earlier than they expected because of illness or other unforeseen events, said Thomas Murphy, a financial planner in Dallas. So it pays to leave plenty of buffer room as you budget out any contribution to your child’s college funds.

Am I leaving free money on the table?

Make sure you are doing everything you can to free up easy cash, Safran said. Refinancing a mortgage right now could save you hundreds of dollars a month, for example. If you’ve done the math and realize you truly can’t spare much (or any) cash for your kid’s education, don’t just leave your child hanging.

“When you simply say you can’t pay, that can discourage a kid from applying to schools at all, since he or she might not realize you can actually get application fees waived,” Murphy said.

Instead, stay involved in the process and fill out the Free Application for Federal Student Aid — no matter what. Even if your family income is too high for your children to qualify for federal aid, simply having a completed FAFSA gives students the option to apply for merit-based scholarships and other grants a prospective school might offer.

Finally, remember that it doesn’t hurt to exercise a little patience: Consider asking for additional aid before the second semester, since money may have freed up because of first-semester dropouts, Murphy said.

What lesson will my child take away?

Not all high school seniors are academically or emotionally ready for college.

“For some, a year in the working world not only allows them to contribute financially but also gives them a sense of accountability,” Keating said. “It might also make them more reasonable in their choice of schools.”

Joining the military or starting at a community college before transferring to a four-year school are other options that can save money and give your kids extra runway to mature before college, Keating said.

Remember that, for your child, choosing a school is not just a financial or academic decision. “It’s also an emotional decision,” Safran said.

Try to keep an open mind. If your child is excited to start right away at a school on the high end of your price range, you can always make your financial help conditional upon their academic performance.

“You can promise you’ll help them pay back their loans after graduation if they get good enough grades,” Murphy said.

Source: 

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Can I Just Walk Away From My Debts?

DEBT

I’ve had a few people say to me recently “If you have debt, just walk away; the banks won’t do anything. My friend stopped paying, and nothing happened to him. Don’t bother with credit counselling, or a consumer proposal, just walk away.” Does that strategy actually work?

The answer depends on your situation.

In some cases the “do nothing” strategy, or walking away, is a viable option.

If you owe money to a bank, they want to be repaid. If you don’t pay them, they will follow a standard sequence of events to collect their money.

The first month you miss a payment they will include a “friendly reminder” at the bottom of your statement, saying something like “this is just a friendly reminder to make your payment; if you already made your payment, please disregard this notice.”

By the second month, the note on your statement will be less friendly: “We will suspend your account if you don’t pay.”

By the third or fourth month, collection calls will start, and you may get threatening legal letters. Eventually your account may be turned over to a collection agency, and then the phone calls and letters become even more intense.

Ultimately, if you don’t pay, the bank has three options:

  1. Stop collection actions and write off your account;
  2. Continue collecting through a collection agency;
  3. Take you to court to get a judgement, which may lead to a wage garnishment.

So when would a bank simply give up? When they have no reasonable hope of collecting from you. That may happen in a variety of situations, including when:

  • The bank doesn’t know how to contact you, because you have moved and they don’t have your address or phone number;
  • They don’t know where you work, so they can’t garnishee your wages; or
  • The bank knows that you have no wages to garnishee, perhaps because you are receiving a pension.

A creditor can only garnishee your wages if you have wages. If you are unemployed, or your income is from a source other than wages from employment, such as a pension, then there are no wages to garnishee.

So the answer to the question “can I just walk away from my debts?” is “yes”, but only if you are not worried about the repercussions of walking away. If you have no assets to seize, no wages to garnishee, and you are not concerned about a low credit score, walking away is a viable option.

DEBT

However, if you have a job, or expect to have a job in the near future, or if you have assets, walking away may not be your best option, because you put yourself at risk for a wage garnishment.

If you owe money to Canada Revenue Agency and have a job, or own a house, or have a bank account, ignoring them is very dangerous. CRA can freeze a bank account or garnishee your wages without a court order.

Here’s my advice: if you have debts, attempt to work out payment arrangements directly with your creditors. They may give you a break on the interest rate or stretch out your payments to allow you to pay them in full. If you can’t make a deal with them, and if you have more debt than you can repay, don’t wait until legal action starts. A licensed insolvency trustee will provide you with a free initial consultation to review all of your options, and they can tell you if walking away is a good option.

If you are 80 years old, and your only income is CPP and OAS, and your only debt is an old cellphone bill from five years ago, walking away is probably your best option. If you are working and can’t pay, a consumer proposal or bankruptcy may be a better option than ignoring the problem and hoping that the problem goes away.

Source : Huffington Post   Licensed Insolvency Trustee, Chartered Accountant

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