Tag Archives: senior living

How Canadian homes became debt traps

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Source: MoneySense.ca – by   November 13th, 2017

Houses have become another debt-laden income-stream for Canadians

In 1998, Ann bought a one-bedroom condo in the Kitsilano area of Vancouver. Gainfully employed at a printing company, she found the monthly mortgage payments were within her budget (Ann and others quoted in this story asked that Maclean’s not use their full names). The building was on the older side, and eventually she got the itch to update the decor. She intended to replace only her bathroom sink; she ended up renovating the entire bathroom. “I remember thinking, ‘Well, now that I’ve started…’ ” The kitchen came next, then the living room and finally the bedroom. Ann thought the renos, funded partly on credit and spaced out over a few months, would boost her condo’s value. She also wanted to keep up with her neighbours. “Everyone was doing something,” she says.

Finances became tight afterwards, and she only paid the minimum on her credit card each month. Every year, her condo fees rose while her salary at the printing company (where she still works) stagnated. She began relying on credit for everyday expenses, and later took out a second card.

Soon, one of her banks began calling with a solution to help manage her debt. She ignored the inquiries, preferring not to think about her finances, but she started to feel desperate: “I just wanted to do something, and that was the only thing coming my way.” The bank offered a loan at a low rate to pay off her high-interest credit card debt, and she ended up taking out a second mortgage for $80,000. The interest rate still wasn’t manageable. “It was a huge mistake,” she says.

Saddled with two mortgages, rising condo fees and a flat income, she continued relying on credit cards. Surprise expenses, such as dental work, added to her debt. Embarrassment kept her from seeking help. Three years ago, she decided to sell her condo. Despite Vancouver’s booming market, the sale didn’t solve Ann’s financial problems. She moved in with a friend and was able to pay off her mortgages, but she couldn’t make much of a dent in her credit card debt.

This year, Ann turned 64. She was carrying $70,000 in debt, and knew she couldn’t work another decade to pay it down. That realization prompted her to seek help, and she eventually met with an insolvency trustee. Earlier this year, Ann’s trustee filed a consumer proposal on her behalf. Less severe than personal bankruptcy, a proposal is an offer to all of an individual’s creditors to pay a portion of debt under a strict plan over a maximum of five years. The remainder is discharged. Creditors typically agree to these arrangements since they are guaranteed to recoup at least some of their money. For Ann, filing a proposal came as a relief. “I actually feel like I can breathe again,” she says.

Other Canadians are still suffocating. Earlier this year, the household debt-to-income ratio hit another record of 167.8 per cent. A long period of abnormally low interest rates has enabled Canadians to carry massive debts, since monthly payments appear manageable. Further, in cities with rising home values, particularly Toronto and Vancouver, homeowners can secure a home equity line of credit (HELOC) to pay other debts or simply fund their lifestyles. Last spring, the Financial Consumer Agency of Canada warned that the increased use of HELOCs “may lead Canadians to use their homes as ATMs, making it easier for them to borrow more than they can afford.”

Insolvencies, though, are rare. As of the end of July, there were nearly 123,000 consumer proposals and personal bankruptcies filed by Canadians this year, a decline of 1.2 per cent from the same period last year. That might be a sign of fiscal prudence, but it’s also the result of record low interest rates that ease debt-carrying costs. Scott Terrio, an insolvency estate administrator and president of Debt Savvy in Toronto, calls this phenomenon “extend and pretend.” Canadians can extend their debt repayment terms and pretend to live a lifestyle they can’t otherwise obtain. He sees it all the time—couples with decent jobs carrying large mortgages, and putting daycare, cars and vacations on credit.

Some reach a trigger moment when they can no longer pretend—a job loss, say, or divorce or illness. But lately Terrio has noticed a change in his business. More clients are coming in because they’re simply tapped out. As with Ann in Vancouver, there is no trigger. “It’s a gradual realization for some people,” Terrio says. “They can’t do it anymore.” Lana Gilbertson, an insolvency trustee in Vancouver, has seen the same change. “Nowadays, they have jobs, they’re making money, they’re plugging along, but they’re just in over their heads,” she says.

The cost of borrowing is set to rise, adding strain to households. The Bank of Canada hiked rates twice this year, signalling more could be coming—depending, in part, on whether households can handle it. Economists at TD Bank Group believe two more rate hikes are likely next year. That will cause rates on everything from lines of credit to car loans to mortgages to tick up. At the same time, house prices are not rising as quickly as they once were in many Canadian cities. RBC Economics forecasts home prices in Canada will increase 11.1 per cent this year—and just 2.2 per cent in 2018. Canadians won’t be able to pull cash out of their homes so easily to get themselves out of trouble. “The insolvency business is cyclical, and we’re at least a year overdue for shedding blood in the system,” Terrio says. “If ever we were poised to hit that right on the head, it’s now.”

For some Canadians who struggle with debt, the problem can be traced back to real estate. In a survey TD released in September, 56 per cent of respondents from across Canada were willing to exceed their budget by up to $50,000 to purchase a home. At the same time, 97 per cent of homeowners said they wished they’d factored in other obligations before buying, such as property taxes, maintenance costs and “overall lifestyle expenses.”

The problem is not confined to Toronto or Vancouver, where huge price gains have enticed buyers to stretch themselves for fear of getting permanently priced out. In Regina, Joshua and his wife purchased a house in 2014 when expecting their first child. Both 24 years old at the time, they carried about $35,000 in debt between them, mostly tied to student loans. “We rushed into getting a house because we just thought it would be the right thing to do,” Joshua says. “It almost felt wrong to be renting and having a kid.” (Joshua’s mom pressured them to buy, too.) In one weekend, they viewed 16 houses. The very last one felt right. They put down five per cent and moved in.

But the couple was blindsided by maintenance costs. Their furnace needed repairs, and they later had to replace the water heater, which set them back hundreds of dollars. After expenses, the pair has virtually no cash to put toward their debt. Joshua’s card is maxed out, and his wife’s card is close to the limit. Joshua says they’re frugal (splurging means going to Subway) and live paycheque to paycheque. The situation became worse this year. His wife is on maternity leave with their second child and their variable mortgage rate ticked up. “Just the way the rate is fluctuating is killing us,” Joshua says, who works in sales at a telecommunications firm. “It can’t keep changing like this.”

Staring down tens of thousands of dollars in debt, rising mortgage costs and no foreseeable way to substantially boost their incomes, the couple decided to sell their house and rent. They’re not expecting a windfall. A while back, their basement flooded and they used the insurance money to repair the foundation. The basement had been finished, but there’s no cash to renovate it, so it will be sold in “as is” condition. The market in Regina is also soft, and the average home price is down slightly from 2014. Joshua hopes to at least get his down payment back, and their financial situation should improve when his wife returns to work as a massage therapist. “We’ll be able to really hack away at our debt,” he says, “but it’s going to take years.”

While real estate has led to financial distress for some Canadians, it’s been a saviour for others. The home equity line of credit has allowed millions of households to borrow against their properties, providing cash for everything from renovations to investing to debt consolidation. HELOCs have been around in Canada since the 1970s, but in the mid-1990s, lenders started marketing them to a wider swath of consumers. Between 2000 and 2010, HELOC balances soared from $35 billion to $186 billion, according to the Financial Consumer Agency of Canada, an average annual growth rate of 20 per cent.

The pace of growth has slowed since then, but balances still hit $211 billion last year. Lenders have been all too eager to dole out HELOCs, creating the perception of instant, easy money. An animated commercial for Alpine Credits, a lender in B.C., features a room full of employees rubber-stamping loans—even for a client who wants to install a four-storey waterslide. (The employees celebrate by cheering while one pops open champagne and another tears off his shirt.)

One common use of HELOCs is to pay off higher-interest debt. Last year, according to Scotiabank, Canadians used $11.6 billion (or 28 per cent of HELOC withdrawals) for debt consolidation. Doug Hoyes, a founder of licensed insolvency trustee Hoyes, Michalos & Associates, has witnessed the shift. The firm has offices across Ontario and in 2011, roughly one-third of the firm’s clients owned a home when they filed for bankruptcy or a consumer proposal. Last August, just six per cent of insolvent consumers were homeowners. “You don’t need to file a proposal to pay off your debt,” he says. “You just go out and get a second mortgage.”

If the pace of home price appreciation slows down—or worse, prices drop—there will be consequences for households that have been piling on debt. The slowdown in the southwestern Ontario real estate market is already creating stress. Hoyes recently saw a couple who purchased a home four years ago and accumulated $70,000 in unsecured debt. They bought furniture, hired landscapers and borrowed to finance a swimming pool. Before the slowdown, the couple might have earned $100,000 by selling their home. Now they might get $70,000, which would barely cover their debts. They’re also reluctant to sell and move to a different neighbourhood. And because of the softening in the market, they haven’t been able to find a lender willing to issue them a HELOC large enough to cover their unsecured debt. Their solution? Convince one set of parents to take out a second mortgage, and borrow from them. “It’s the bank of mom and dad,” Hoyes says.

And while debt consolidation is an effective strategy if consumers don’t fall back on bad habits, Terrio says recidivism is a problem. “They go ka-ching out of their house and pay off their credit card debts, but they go and run up their cards again,” he says.

Borrowing against her home wasn’t enough for Charis Sweet-Speiss to pull herself out of debt. A registered nurse, she divorced and moved from Ottawa to Oliver, B.C., a town south of Kelowna, in 1998. Her then-boyfriend (now husband) wasn’t working at the time, and the couple used the divorce settlement to start building a new life; they bought a used car, a place to live and furniture. “Then that money was gone, so I just started using credit cards,” she says. “And it was so easy.” Their debt started building, and their income wasn’t sufficient to pay more than the minimum. New credit cards she’d never asked for arrived in the mail, and Sweet-Speiss started using them. She had 13 on the go at once, and eventually they were all maxed out. “I’ve always been employed. I make a good salary. But just paying the minimum every month was a lot of money,” she says. Every six months, she phoned each credit card company to wheedle them into reducing her interest rate. She caught some breaks, but never enough to make a big difference: “It was a horrible way to live.”

Sweet-Speiss says she wasn’t frivolous with her spending, but in retrospect, she made questionable decisions. When her daughter would run up a large balance on her own credit card, Sweet-Speiss sent her money—even though it meant sinking deeper into debt herself. Sweet-Speiss borrowed against her home at one point and withdrew money on two separate occasions to consolidate her debt, but was still left with $40,000 on her cards, and it built up again.

After more than a decade of amassing debt, Sweet-Speiss turned to the Credit Counselling Society for help ridding herself of nearly $67,000 spread across 13 cards. Once enrolled, her interest payments stopped and she was put on a plan to pay down principal. She completed the program this year. She still has a mortgage and a line of credit, but is finally free of high-interest credit card debt.

Sweet-Speiss says her mortgage would have been paid off a decade ago had she never borrowed against her house. Indeed, one of the problems with home-equity loans is that they cause debt persistence. HELOCs are marketed with little or no obligation to repay in a timely manner. For years, one of the main advantages of owning a home is the forced saving effect—paying the mortgage, combined with rising property values, builds equity. A HELOC undermines that dynamic, tempting consumers to access cash now rather than build wealth over the long term.

It marks a fundamental shift in the way Canadians think about homeownership. “Whatever happened to getting to the end of a mortgage and owning your home?” says Gilbertson, the trustee in Vancouver. “It’s less about truly owning our homes today and more about having another revenue stream to fund our lifestyles.”

That Canadians are carrying record amounts of debt is not in dispute. But the magnitude of the problem is contested. “I think the fears are overstated,” says Paul Taylor, CEO of Mortgage Professionals Canada. “Canadians are incredibly prudent, and history will show that.” As the head of an industry association for mortgage lenders, brokers and insurers, Taylor isn’t exactly impartial on the issue. But he points to a report from the Parliamentary Budget Officer released earlier this year showing that, since 2009, the debt service ratio—a measure of income spent to pay debt—has remained steady at around 14 per cent, not much higher than the long-term average. That’s a sign that even though we have more debt than 20 years ago, we’re not overextending ourselves, Taylor says.

But the same PBO report projects the debt service ratio will rise to an all-time high of 16.3 per cent by the end of 2021. Taylor says the premise is a “little bit flawed” because it presumes Canadians will make no changes to their finances owing to higher interest rates. “I’m certain people will become prudent again to ensure they retain that [historical] expense ratio,” he says. Already, brokers have been fielding calls from Canadians about locking in their mortgages to guard against future increases, for example.

Bank of Montreal chief economist Douglas Porter also contends that too much emphasis is placed on the debt-to-income ratio. “We have long been of the view that much of the commentary on this topic has been overwrought,” he wrote in a research note this month. The savings rate is close to the 25-year average of five per cent, which doesn’t point to a consumer debt apocalypse. Rather, Porter expects spending to “gradually moderate” as borrowing costs rise.

Still, numerous surveys show Canadians are worryingly close to the edge. A report from MNP Ltd., an insolvency trustee, released in October found 42 per cent of Canadians said they don’t think they can cover basic expenses over the next year without going deeper into debt. An earlier survey this summer found 77 per cent of respondents would have trouble absorbing an additional $130 per month in interest payments. And as organizations such as the IMF and the OECD have constantly warned, high household debt renders the country far more vulnerable to economic shocks.

When a downturn does hit, even a high income won’t necessarily provide enough protection. Gene moved from the U.S. to Calgary 12 years ago to take a job with a major oil company, earning more than $300,000 annually. He purchased a home for close to $1 million and supported his wife, two kids and mother-in-law. In 2015, Gene lost his job when the price of oil crashed, and was out of work for nine months. He took out a home equity loan for $30,000 to make ends meet, and eventually found another job at a pipeline company, but for half his previous salary. A six-figure income would be more than enough for most Canadians, but Gene and his family were accustomed to their lifestyle. The kids were enrolled in extracurricular activities, and housing costs added up to $4,100 every month.

A year later, Gene was laid off again. “It was just devastating for us,” he says, adding that he began questioning his self-worth if he was unable to provide for his family. He eventually found another job, but at a still smaller salary. On top of the mortgage and the line of credit, Gene had another $20,000 loan. When he first purchased his house, he didn’t quite hit the 20 per cent down payment threshold; his bank offered him a loan to cover the difference. He had a couple thousand in credit card debt and a small, high-interest loan from EasyFinancial he’d taken to cover an unexpected medical expense for a family member. Finally, he faced a $90,000 tax bill, since he opted not to pay after he lost his job. Gene sought help from an insolvency trustee earlier this year. “I just wasn’t making enough money, and I had to protect the family,” he says. Gene submitted a consumer proposal, but one of his creditors rejected the terms. In October, Gene filed for bankruptcy—just over two years after making a salary most Canadians can only dream of.

This sort of precariousness worries some experts, who fear wider implications for the Canadian economy. “We continue to see the household sector as accident-prone, with a complacency toward debt which could prove disruptive to the economy,” wrote HSBC Canada’s chief economist recently. The result is Canada is at “some risk” of a balance sheet recession—a period of slow growth or decline caused by consumers saving and paying down debt rather than spending. David Madani, an economist with Capital Economics in Toronto, doubts the growth Canada has seen in exports recently will be enough to offset the decline in consumer spending. “Canadian policy-makers have allowed household debt to rise above the disturbingly high levels reached in the U.S. in 2007, raising the risk of a similar potentially disastrous deleveraging down the road,” Madani wrote.

Statements like that could be dismissed as fear-mongering, but the reality is Canada hasn’t been in this situation before, and the outcome is impossible to predict. Canadians ignored warnings from policymakers about piling on debt for years because low interest rates were too enticing. Now households will have no choice but to dial it back. The only question is how bad the fallout will be.

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Indebted seniors among Canada’s most at-risk sectors

Indebted seniors among Canada’s most at-risk sectors

 

Indebtedness among Canada’s elderly population is on the rise, according to academics and financial experts at an international conference at Ottawa’s Carleton University last week.

Contributing to this trend—not just in Canada, but worldwide as well—are multiple pressures that include easy credit, unreliable pension plans, divorce among seniors, unmonitored spending by people with dementia, and financing the needs of younger family members.

Compounding the issue is a similar growth in the number of people in late middle age who are quitting employment or taking on even greater debt, either to care for their aging parents or to help their adult children buy their own homes.

“There is the worldwide phenomenon of older people who go into debt to help their children,” Carleton University School of Public Policy and Administration professor Saul Schwartz said, as quoted by the Ottawa Citizen.

Earlier this year, a global survey commissioned by HSBC found that 37 per cent of young Canadians who currently have their own homes used the “Bank of Mom and Dad” as a source of funding. Meanwhile, 21 per cent of millennial home owners moved back in with their parents to save for a deposit.

Schwartz, who was one of the conference’s organizers, added that Canadian seniors suffer from a lack of source that provides impartial advice.

“You can talk to your bank. But if the advice is free, it’s probably not unbiased,” he explained.

A study conducted by Equifax Canada and HomEquity Bank last year uncovered that 16.5 per cent of people aged over 55 were carrying mortgages. The average mortgage balance in this demographic swelled from $158,000 in 2013 to $176,000 in 2015.

Bankruptcy trustees Hoyes, Michalos & Associates Inc. have warned that seniors were the fastest-growing risk sector for bankruptcies.

“The share of insolvency filings for debtors aged 50 and over increased to 30 per cent in our 2015 study compared to 27 per cent in 2013,” the Ontario-based firm warned, adding that on average, debtors aged over 50 held unsecured debt of over $68,000 (over 20 per cent higher than the average debtor).

 

Source: Mortgage Broker News – by Ephraim Vecina15 Aug 2017

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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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Seniors look to their home for financing the future

Canadian seniors consistently report that they prefer to live at home and age in place, instead of moving to assisted living. Yet, they also report that financial challenges are the biggest hurdle to doing so.

A recent report from the Federation of Canadian Municipalities (FCM) shows that 93% of seniors live at home and prefer to age in place. And, HomEquity Bank statistics support this, reporting that 60% of retired Canadians describe staying in their home as critical to their quality of life.

“Every day, our team hears from older Canadians who want to remain in their homes and communities, but find the financial challenges very stressful,” says Yvonne Ziomecki, SVP, HomEquity Bank. “We work with seniors to help them explore utilizing the equity in their homes so they can continue to live in a familiar environment – which in most cases is the family home.”

According to the FCM report:

  • 700,000 senior-led households face a housing affordability challenge;
  • a combination of modest incomes and high living costs mean that one in four senior-led households are spending more than 30% of their income on shelter; and
  • seniors who live alone experience poverty at twice the rate of other seniors.

One reason finances have been adversely affected, notes the FCM study, is because only one-third of the Canadian workforce is covered by a registered pension plan, down from 37% in 1992.

HomEquity Bank stats show 30% of Canadians nearing retirement have $50,000 or less in savings. And, almost 70% of those nearing retirement are still carrying debt, with 35% of Canadians nearing retirement planning on using the value of their home to generate retirement income.

Source: MortgageBrokerNews.ca Donald Horne | 07 Jan 2016

Are you a senior who would like to stay in your own home and worried about being able to afford it? Book your know obligation consultation with the Ray McMillan Mortgage Team or visit www.RayMcMillan.com and let us explore your options together.

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Marriage-like relationships hard to prove in court, B.C. case shows

The courts can be a real heartache when it comes to complex relationships and claimants hoping to establish their rights as a spouse.

They shared pet names, dogs and the cooking.

But when Penny Neufeld lost the man who used to call her his “wife without a wedding,” what proof did she have that their relationship was actually spousal?

Norman Dafoe’s children claimed Neufeld was just someone their dad “took in at a difficult period in her life.”

They tried to pin him down on the exact nature of the relationship many times before he died, but doubted it was “intimate.”

And so, in what lawyers say is an increasingly common occurrence, it was left to a judge to sift through the details to determine if the two lives were — in fact — one.

“The only document in evidence that actually suggests that they had any kind of joint enterprise is a receipt from a veterinarian,” B.C. Supreme Court Justice Mark McEwan noted in his decision.

‘No end’ of disputes

No paper perhaps, but there were witnesses who saw the couple together: a storekeeper and a friend.

Neufeld recalled Dafoe’s smoking habits and how often the house they shared had been painted.

And then, McEwan said, there was her nickname: “‘D-Rod,’ apparently a reference to her hairstyle looking like that of Rod Stewart, the entertainer.”

Kimberly Whaley

Toronto-based estate lawyer Kimberly Whaley says the courts have seen an increase in cases involving complex family arrangements. (Kimberly Whaley)

“There’s no end of the types of disputes, but it is interesting to see how our courts are treating these relationships,” says Kimberly Whaley, a Toronto-based estate lawyer.

“Part of it probably has to do with sheer demographics in an aging population. People living longer, being healthier in later years, having later life partnerships. And then these unions cause rights and obligations.”

Whaley wrote a paper last year showing trends that “demonstrate an increase in competing family interests.” The number of Canadian common law couples rose 13.9 per cent between 2006 and 2011; more than 12 per cent of couples with children are step-families; and nearly half of those involve complex permutations and combinations of kids.

People lie about relationships at the best of times. They become downright secretive when religion, culture, children or Revenue Canada is involved.

Which means lawyers call on everything from Christmas cards to prescriptions for Viagra to establish a “marriage-like” relationship.

If it looks like a marriage …

As part of his reasoning, McEwan referred to a list of “indicia of ‘cohabitation or ‘consortium'” which comes up time and again in spousal support cases. It covers everything from sleeping arrangements to conduct in public.

Did the parties have sex? If not, why not? Did they buy gifts for each other on special occasions? Who did the shopping and cooking? How did the community and their children view them both alone and as a couple?

Even so, making a call can be tough.

Ontario Superior Court Judge Duncan Grace admitted his frustration last summer after Helen Havaris spent months trying to convince him she was entitled to part of John Prelorentzos’s estate.

The 71-year-old was still married to another woman when he died, though they had been separated for years.

But Havaris claimed she lived with him, travelled with him and attended his family’s Christmas, Easter and birthday celebrations.

His children said they saw no signs of affection. Indeed, they claimed their father used to joke about the fact Havaris “had placed a chain on the inside of her bedroom door.”

The judge said he found Havaris’s testimony “wooden.” Not one of her witnesses “mentioned a single word or gesture that demonstrated affection.”

“Despite the length of the trial the evidence on this issue left me asking: is this really all there is?” Grace wrote.

But in the end, after poring through documents including the pair’s rentals of one-bedroom hotel rooms, Grace decided “by a very thin margin” that Havaris qualified as Prelorentzos’s spouse.

Kids are always the last to know

In both that case and Neufeld’s challenge, the judges had to consider the attitude of the deceased’s children toward a woman who was not their mother.

When Dafoe was close to death, “a nurse who mistook the plaintiff for the deceased’s ‘wife’ appears to have created anxiety in the deceased’s family,” McEwan wrote.

Georgialee Lang

Family law expert Georgialee Lang says children are often the hardest to convince in spousal estate battles. (Georgialee Lang)

There were competing stories about deathbed statements and cash boxes. His family changed the locks on the doors. Neufeld “announced she would not be staying.”

B.C. family law expert Georgialee Lang says she has represented many women seeking to prove their place in a man’s life. Inevitably, the offspring are the hardest to convince.

“That’s part of the dynamic. He doesn’t want to disappoint his children. Sometimes a relationship has happened very quickly after a spouse died and it’s seen as unsavoury,” she says.

“It’s all those kind of personal, emotional and moral dynamics that come into play.”

In the end, McEwan decided the proof of Neufeld and Dafoe’s relationship lay as much in how others saw them as in how they saw themselves.

She was a caregiver during his illness. He bought her two cars. They appear to have been faithful to each other. 

And McEwan said the very fact his children had been asking what was going on for years “implicitly affirms a relationship that appears to be spousal or becoming spousal.”

The judge awarded Neufeld $60,000 out of a gross estate worth $160,000.

It’s a battle you can avoid with two simple weapons: a piece of paper and a pen.

Corrections

  • A previous version of this story mistakenly said Dafoe was awarded $60,000 by the judge. In fact Neufeld was awarded $60,000.
    Nov 02, 2015 6:49 AM PT

Source: Jason Proctor, CBC News Posted: Nov 01, 2015 2:00 AM PT

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