I have decided to stop making predictions in the final column of the year. Most of them turn out wrong, so what is the point? Instead, it might be better and more useful to discuss a couple of newsworthy events from this past year which I think are somewhat surprising, and worth keeping in mind for the future.
Since so many Canadians (“baby boomers,” specifically) are now retiring, it is no surprise that a stream of books are released on the retirement topic every year. For some years, I have been discussing pressing issues relating to the topic, including pensions and other Estate planning concerns. The focus has been, in part, on the significance of planning to remain financially secure after retirement.
Much has been written across the country about Canadians not having enough savings for their retirement. Many people have written about the need to increase CPP benefits to help these persons.
Earlier this month, a book called The Real Retirement: Why You Could Be Better Off Than You Think, and How to Make That Happen was released (available on Chapters/Indigo online and, I expect, in major bookstores across the Lower Mainland). The authors, Mr. Fred Vettese and Mr. William Morneau, first try to put to rest the myth that most Canadians need to panic when considering their retirement.
They discuss the high government investments in healthcare for seniors, in illustrating that seniors do receive assistance from their governments. They add that the poverty rate for seniors is lower than for the general population.
Put another way, the authors try to put the reader at ease. It may be that we are not as bad off as we may think.
The authors are worth reading. Mr. Vettese is the chief actuary of the consulting firm Morneau Shepell, in Ontario. He also sits on the Pension Policy Committee of the C.D. Howe Institute, a very important research organization in Canada. Mr. Morneau is the Executive Chairman of Morneau Shepell, chair of the Board at St. Michael’s Hospital in Toronto, and chair of the Board at the C.D. Howe Institute.
These authors are clearly accomplished and, in my view, are rightly positioned to write such a book.
Anyone considering retirement should read books on the topic, because in general, things are changing, and seemingly fast. Informing ourselves is more necessary than ever. This particular book seems to be timely, and significant.
A catchy headline, to be sure, but this term has everything to do with existing law, and is worth knowing.
Estate stripping is what arguably happened in a case decided in the B.C. Court of Appeal earlier this year called Mawdsley v. Meshen. I have written about this case twice in the past couple of years.
In 2010, the B.C. Supreme Court decided that the late Ms. Meshen, before she died, could lawfully transfer her assets to an Alter Ego Trust, shielding them from her common law spouse in a Wills Variation action.
The Court of Appeal dismissed Mr. Mawdsley’s appeal in early-2012. Later this year, the application for leave to appeal to the Supreme Court of Canada was also dismissed.
I spoke briefly with the Lawyer who did the appeal, who seemed to suggest that “Estate stripping” is the appropriate term, and is alive in British Columbia.
In this case, Mr. Mawdsley tried to rely on the B.C. Fraudulent Conveyance Act in his effort to have his late spouse’s asset transfers set aside and returned to her Estate. The Supreme Court and Court of Appeal decided that the Fraudulent Conveyance Act did not apply to his situation, and that only the Wills Variation Act applied.
The problem was, Mr. Meshen’s Estate was tiny compared to the value of the assets that Ms. Meshen had transferred to the Trust.
This case could, in future, prove to be seminal in situations where a person — particularly someone in a subsequent relationship, as Mr. Mawdsley was — looks to deplete their Estate to avoid having assets go to a person they don’t want to benefit.
One question worth asking is whether this ability might defeat the intention behind the Wills Variation Act. The case also suggests that a little planning, and perhaps a written agreement, would probably alleviate expensive (and likely bitter) litigation.
Have a healthy, happy new year.
This column ran in the Richmond News on December 28, 2012.