PAGE 2, MONEY SUPPLEMENT, 7990

Dying intestate

can have serious
family consequences

Too many of us do it, but put-

ting off preparing a will can:

have genuinely serious conse-
quences for your family and
other prospective benefic-
iaries.

Once you take the plunge,
you'll wonder why you didn’t
get it done years ago because
it’s really quite simple. When
yours is signed and put away
for safekeeping, you'll have the
real satisfaction of knowing
you've done the right thing.

If in fact there is no will when
you die, the surrogate court in
your province will appoint an
administrator for your estate.
There is no guarantee it will be
someone of whom you would
have approved. The distribu-
tie. of your estate is then en-
ti iy at the discretion of the
ac ministrator — according to
the law but not necessarily ac-
cording to your wishes because
you left no legal record of what
you wanted. oe =

So it’s certainly a good idea to
act right away. You can buy
forms from stationery stores
and anyone other than bene-
ficiaries can witness your sig-
nature. But unless the will is
extremely simple — even then,
really — it’s best to ask your
lawyer for help. .

Before you meet the lawyer,
assemble details of your assets,
plus locations and numbers of
all insurance policies in force
as well as any outstanding sup-
port arrangements or any
other financial] commitments
which will outlive you.

You should also give some
thought to whom you wish to
name as your executor — the
person who makes sure your
intentions are carried out after
death. Finally, plan to review
your will every three years
from now on to make sure it
reflects any change in cir-
cumstances which may have
occurred.

| Barrie F Gieselman

—

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Telephone: 635-7202

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_ Frank Donahue

Just as every business has a
balance sheet, every in-
dividual, or at least every
family, should have a net
worth statement — a list of
all assets and liabilities to
show how much the house-
hold is worth. |

There are several good prac-
tical reasons for knowing
where you stand. First, you
can make better use of your

control of expenditures as
you have a clear idea of what
you own and what you owe.
Secondly, knowing what's
left over after deducting cur-
rent liabilities provides a
strong incentive to save and
as you see your net worth in-
crease, you'll be encouraged

income and maintain better |

Net worth calculation helps
you chart financial progress

to help it grow more.
Knowledge of your net
worth is also an essential
component of all financial
planning. How else can you
judge what to set. aside for
buying a home, to pay for
children’s education, to es-
tablish your own business, to
plan investments and to look
ahead to retirement years?
A net worth statement is
also needed for estate plan-
ning. Everyone needs a will
and to know what's going to’
be left before deciding how
‘the estate is to be broken up.
_ Futhermore, if you borrow
cash or arrange a mortgage,
you'll have to give the lender
an accurate and up-to-date
account of existing assets and

‘solutely essential to obtain

liabilities. How much you
have will govern how much
you can borrow.

Then in the future, you
should plan to update your
net worth statement annual-
ly. In the process, it’s not ab-

reappraisals of valuable per-
sonal property each year. But
it probably makes sense to
have jewelry, art and anti-
ques locked at by.an expert
every three years.

Your bank or trust company
will probably have a folder to
give you pointers on how to
calculate net worth. Your
local credit union also has an
excellent little free guide, in-
cluding a sample form, in the
“Financial Fitness” series,

Where does all the money go?

Find out with a family

By PETER MORGAN, CA

Whether we're spurred by an
overloaded credit card or the
cost of a major home repair,
most of us are forced to con-
front the state of our finances
at some point each year. More
often than not, our reaction is’
a shake of the head and some —
mumbling amazement about
where all the money went.

This year, why not find out?
By deciding to do so you'll be
taking control of your finances
instead of letting them control
you. Los 2

Start with a family budget.
The objective is to establish
your family’s financial goals
and define the position you'd
like to be in at a certain point
in the future.

While one goal might be to
have $5,000 more in the bank
this time next year, only by
taking the next step and going
through the budgeting process
can you certify whether your
goal is a reasonable one.

The process begins with an
accurate assessment of your
family income — that means
income in after-tax dollars —
and expenditures. Expendi-
tures generally can be broken
down into four main cate-
gories; home; transportation;
living; and loan repayment and
savings. |

Each category is then broken
down further. Home expendi-
tures, for example, include
rental or mortgage payments,
utilities, maintenance, in-
surance, telephone, property
taxes and so on. Banks and

There is light
at the end
of the tunnel.

Please give generously.

trust companies are usually.

happy to provide customers
with budgeting booklets con-
taining such breakdowns,
along with budget worksheets,
on request.
Estimate discretionary —
expenses too

You'll also have to estimate as
best you can your discretionary
expenses, Be realistic about
the amounts you use for cloth-
ing, entertainment, holidays
and spending money, And don’t
be tempted to change your
spending habits on paper just
because it looks better.

budget .

. When accounting for basic ex-

penditures, pro-rate on a
monthly basis any bills ‘that
are paid annually or on a less
than monthly basis.

Next, tote up all costs. If your
expenses exceed your income,
review the numbers. Maybe
you've been too generous some-

“where and you can cut costs

without undue pain.
_Tf not, then the family has

~~ some tough decisions to make.
. Will it. be new hockey equip-'

ment, or a family camper? New
drapes or a holiday trip? When
deciding among alternatives,
be sure the choices are of equal
value. Some things, such as
fixing a hole in the roof, just
aren’t optional. They’re musts!

Finally, although it’s admir-
able to budget, resist overzeal-
ousness. Drastic cutbacks or
tedious tracking of every dollar
spent can be counter-produc-
tive, They can lead to frustra-
tion and, in turn, to the demise
of the whole budget attempt.
Peter Morgan is a member of the
faculty of George Brown College,
Toronto,

Dividend reinvestment .
plans provide savings

Most investors are familiar
with the way mutual fund
earnings can be ‘rolled over
each quarter to buy additional
units at the price prevailing on
the dividend date. Then, next
quarter, your return is based on
the increased number of units
— and so on until you decide to
cash in,

Less well known, but increas-
ingly common are similar rein-
vestment arrangements for
shareholders of many major
corporations. The plans are
well worth looking into.

First, they provide a valuable
element of “forced savings”. If
you don't get a dividend che-
que, you're not tempted to
spend the money.’ Further-
more, you acquire your new
shares at lower cost because
there’s no broker's fee to pay.

‘Better still, some companies

actually offer shareholders a

| discount on additional shares

purchased with dividends.
It’s all good news if you're a
smaller-scale investor whose
commission. charges are
‘proportionately high. But
there is a small disadvantage
for larger operators because
participation in a reinvestment

plan means loss of control as to:

exactly when you buy.
What about RRSP eligibility?
The regulations are clear that
shares purchased through a
dividend reinvestment plan
can be included in your RRSP
portfolio. However, some
brokers discourage the practice
because of the extra paperwork
for small return. So it makes
sense to determine your
broker’s policy ahead of time.
For more information and s
list of companies with plans
write the Toronto Stock ‘Ex-

change at Exchange Tower, 2 — .

First Canadian Place, Toronto,
Ont. M5X 12. :

ap ees