THE PARTIAL MANDATE What is a partial mandate?
As the name suggests, a partial mandate is a mandate for clients who do not need complete
integrated financial planning.
How to proceed with a partial mandate
For all your files you must complete the following sections:
• Professional services contract (pp.1- 3)
• Data collection questionnaire (client profile) (pp.4-10)
• Sections concerning the situations related to the mandate entrusted to you by your
clients (pp.11-35)
For each of these situations, we have provided:
• A list of the main objectives related to the situation
• A list of the main documents that may be useful
• References to La Collection de l’IQPF, related to every objective, to help you
formulate your analyses and recommendations
A partial mandate is a flexible tool that you can use in part or in whole, based on the needs and
objectives of your client, and still provide integrated financial planning.
Adapt it and customize it – it’s your personal work tool!
We hope you will find it useful and that it will help you in the practice of integrated personal
financial planning.
PROFESSIONAL SERVICES CONTRACT City, date Addressee Address Subject: Financial planning Ref. no.: File no. ____________ Dear (Addressee), Further to our recent meeting, we wish to offer you our services to complete an integrated personal financial plan, establish an action plan and, if necessary, make recommendations concerning the objectives we discussed. We are authorized to act in the following areas: financial planning, individual insurance, group savings, (specify disciplines). We also offer the following financial products and services: financial planning, life and disability insurance contracts, mutual funds (specify). For greater certainty, our services will consist of examining the following areas: ‰ Personal and family situation ‰ Financial situation ‰ Tax situation ‰ Children’s education funding situation ‰ Retirement planning situation ‰ Estate planning situation ‰ Protection situation For each of these situations, we will take the accounting and tax consequences into consideration when formulating recommendations and analysing your current situation. 1 Consideration For the services rendered, you agree to pay us the sum of $______________ for every hour worked in relation to this contract, which we estimate at a total of approximately __________ hours. The appropriate taxes (GST, QST), along with any fees and expenses incurred, will be added to this price. You agree to make an immediate down‐payment of $__________, deductible from the total sum invoiced, the balance of which will be due 30 days after invoicing. Interest in the amount of _____% per annum will be charged on any balance unpaid after 30 days. This contract may be rescinded at any time. In the event the contract is rescinded, you agree to pay for any hours worked or expenses incurred up to the date of revocation. Charges and conditions As your financial planners, we agree to provide you with a written report that covers all of the items listed above, accompanied if appropriate by charts outlining our analysis and recommendations. In particular, we will keep you informed of our progress on your file, and the final report will be submitted to you in approximately _________________________. We will then set up a meeting to explain the contents and recommendations. If additional work is required, you will be informed and additional fees may be charged. You should understand that the report may need to be updated regularly. The fees for periodically updating the report can be the subject of a later agreement. You agree to answer all questions asked and to provide us with all documents necessary to carry out this contract, whether they are in your possession or in the possession of third parties. To this end, you will immediately sign letters authorizing us to obtain information directly from third parties. The information obtained will remain confidential at all times and will not be used for any other purposes. You understand that our responsibility is limited by our access to the documents provided and to their content, and that the recommendations we offer are only valid insofar as the prevailing social, family, economic and market conditions and laws remain unchanged. Should the implementation of any of the recommendations made in the report require the services of specialists, our coordination and integration fees will be charged over and above their fees. 2 Sincerely, (Signature) Name of financial planner (BLOCK LETTERS) Name of financial institution or firm I, (enter the first and last name of the client), the undersigned, accept the terms of this service contract and agree to uphold all of the conditions. Signed in , this
(Signature) Name of client (BLOCK LETTERS) day of (month, year) Note: If remuneration is to be based on commissions on financial products sold, this must be clearly indicated. In such a case, it is recommended that an alternate type of remuneration, such as an hourly rate, be provided, in case the contract is rescinded. 3 DATA COLLECTION QUESTIONNAIRE CLIENT PROFILE FOR YOUR PERSONAL FINANCIAL PLAN CONFIDENTIAL File no.: Name of client: Type of client: Name of spouse: Questionnaire completed on: Updated on: Planner: 4 PERSONAL INFORMATION Residence and employment Client Spouse Mr. Ms. Mr. Name: Ms. Name: Address: Since (date): Date of birth: Date of birth: SIN: SIN: Home phone: Home phone: Work phone: Work phone: Cell phone: Cell phone: Fax: Fax: Email: Email: employee self‐employed retired employee Address: Address: Since (date): Since (date): Position: Position: 2 1. Permanent 3 4 2. Temporary Name: 1 Name: Job type: Job type: self‐employed retired 1 3. Independent 2 3 4 4. Not employed 5 Other information Client Spouse smoker State of health: non‐smoker 1 1. Excellent 2 never smoked 3 4 2. Good smoker State of health: non‐smoker 1 3. Acceptable 2 never smoked 3 4 4. Poor Details: 6 PERSONAL INFORMATION (cont’d) Civil status Since (yy) ‰ single (mm) (dd) ‰ married place of marriage: ‰ civil union place of union: ‰ de facto union ‰ widow(er) ‰ separated ‰ divorced Marriage contract ‰ partnership of acquests ‰ separation of property ‰ community of property ‰ other specify: Cohabitation agreement ‰ yes ‰ no ‰ n/a Waiver of family patrimony ‰ yes ‰ no ‰ n/a ‰ yes ‰ no ‰ witnessed date: _______________ Mandate in case of incapacity ‰ yes ‰ no ‰ notarial ‰ witnessed date: _______________ Will ‰ notarial ‰ holograph ‰ holograph 7 Children Grandchildren Civil Last status name Name DOB Job Annual income
1‐ 2‐ 3‐ First name DOB 8 PERSONAL BALANCE SHEET AS AT __________________________ Client Spouse Total $ $ $ ASSETS Cash and near‐cash assets Bank accounts Non‐registered investments TFSA Personal assets Principal residence Secondary residence Automobiles Other Other Registered assets RRSP, RRIF, LIRA HBP Registered pension plan (RPP) RESP TOTAL ASSETS LIABILITIES Personal loans Credit cards Line of credit Car Furniture RRSP Other 9 Mortgage loans Principal residence HBP Secondary residence Rental property Other TOTAL LIABILITIES NET WORTH Notes: 10 NAME: _______________________________________ Determination of cost of living Year: ____________ Client Spouse Total $ $ $ SOURCES OF INCOME Employment income Self‐employment or business income (net) Rental income Investment income Support payments Annuities and other pensions Other income TOTAL GROSS INCOME TAXES AND CONTRIBUTIONS QPP and CPP contributions Employment insurance contributions Pension plan contributions RRSP contributions Provincial income tax Federal income tax TOTAL TAXES AND CONTRIBUTIONS 11 AVAILABLE INCOME NON‐REGISTERED SAVINGS CHANGE IN CASH AND DEBT 1 COST OF LIVING LESS: 1
The change in debt corresponds to the change in the balance of personal loans. 12 PERSONAL AND FAMILY SITUATION OBJECTIVES Yes No Comments Get married or enter civil union Get divorced Enter de facto union relationship End de facto union relationship Have children Other DOCUMENTS Original Copy Comments Marriage contract Cohabitation agreement Other SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) 13 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to complete the Client Profile. Objective: Get married Steps Reference Evaluate the effects of marriage or civil union Module 2, – Chapters 2.2 and 2.3 Analyse the various matrimonial regimes Module 2 – Chapter 2.5 Evaluate the potential effect of the partition of the family Module 2 – Chapter 2.4 patrimony and the matrimonial regime Evaluate the other rights arising from marriage or civil union Module 2 – Chapter 2.7 Steps Reference Evaluate the effects of a divorce Module 2 – Chapter 2.9 Objective: Get divorced Evaluate the potential effects of the partition of the family Module 2 – Chapters 2.4.4 to 2.4.7 patrimony and the matrimonial regime and 2.5 Evaluate the effects of other rights arising from marriage or Module 2 – Chapter 2.7 civil union Objective: Enter a de facto union Steps Reference Analyse the repercussions of living in a de facto union Module 2 – Chapter 2.10 Analyse the clauses to include in the cohabitation agreement Module 2 – Chapter 2.10.4 INSTITUT QUÉBÉCOIS DE PLANIFICATION FINANCIÈRE
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Objective: End a de facto union Steps Reference Evaluate the effects of terminating the de facto union Module 2 – Chapter 2.10.2 Evaluate the effects of the provisions of the cohabitation Module 2 – Chapter 2.10.4 agreement Objective: Have children Steps Reference Evaluate the legal effects of becoming a parent Module 2 – Chapters 2.2, 2.7.3, 2.10.1 and 2.10.2 INSTITUT QUÉBÉCOIS DE PLANIFICATION FINANCIÈRE
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FINANCIAL SITUATION OBJECTIVES Yes
No Comments Evaluate net worth Evaluate cost of living Eliminate personal debts Establish a savings strategy Review the investment strategy Buy a house Other DOCUMENTS Bank statements Original
Copy Comments Investment account statements Tax account statements Tax returns for the last three years Notice of assessment Purchase or long‐term lease contracts Employment income (savings, loans, credit cards) SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) OTHER QUESTIONS Does the client expect any major cash inflows or outflows in the next year? Is the client interested in borrowing to invest? Does the client have commitments from a previous marriage or relationship? Has the client opened a tax‐free savings account (TFSA)? Yes No Comments 17 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to complete the Client Profile. Objective: Evaluate the cost of living Steps Reference Determination of cost of living Module 4, Annexe 2, Section 16.1.6, 16.1.6A, Annexe 2 Draw up a budget Module 4, Section 16.1.6A, Annexe 2 •
Does the budget situation generate savings or a deficit? •
Is there an emergency fund? •
Is the amount of the emergency fund adequate? •
Are the cash holdings adequate? •
Is the line of credit used? Reference Objective: Eliminate personal debts Steps Credit management • Does the client have loans with interest that is not tax‐
deductible? •
Module 4 – Chapter 17 What are the interest rates and maturities of the various debts contracted by the client? •
Does the current level of loans compromise the client’s short‐, medium‐ or long‐term financial viability? •
Is debt used effectively? •
Can the debts be repaid without penalty? 18 Objective: Review the investment strategy Steps Target asset allocation based on answers obtained from Reference Module 6 – Chapter 1 investor profile questionnaire Determine current asset allocation • What is the rate of return generated by the RRSP and non‐
registered portfolios? •
What is the rate of return generated by the income‐
producing assets? •
Is the investment portfolio diversified? •
Is the investment portfolio structured to minimize income taxes? •
What is the fee structure of the portfolio? •
Is the “growth” portion of the portfolio protected against a market crash? Module 1 – Section 5.5.2 Module 6 – Chapters 2 and 4 RISK TOLERANCE QUESTIONNAIRE Based on the work of university researcher and certified financial planner John Grable, Ph.D., and Ruth H. Lytton, Ph.D., this survey was developed after many years of examining dozens of risk evaluation methods and administering tests to over a thousand participants. The researchers combined the most effective questions to create the thirteen below. The score is explained at the end of the survey. 1. In general, how would your best friend describe you as a risk taker? a) A real gambler b) Willing to take risks after completing adequate research c) Cautious d) A real risk avoider 2. You are on a TV game show and can choose one of the following. Which would you take? a) $1,000 in cash b) 50% chance at winning $5,000 c) A 25% chance at winning $10,000 d) A 5% chance at winning $100,000 3. You have just finished saving for a “once‐in‐a‐lifetime” vacation. Three weeks before you plan to leave, you lose your job. You would: a) Cancel the vacation b) Take a much more modest vacation c) Go as scheduled, reasoning that you need the time to prepare for a job search d) Extend your vacation, because this might be your last chance to go first‐class 4. If you unexpectedly received $20,000 to invest, what would you do?? a) Deposit it in a bank account, money market account, or an insured CD? b) Invest it in safe high‐quality bonds or bond mutual funds c) Invest it in stocks or stock mutual funds 5. In terms of experience, how comfortable are you investing in stocks or stock mutual funds? a) Not at all comfortable b) Somewhat comfortable c) Very comfortable INSTITUT QUÉBÉCOIS DE PLANIFICATION FINANCIÈRE
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6. When you think of the word “risk,” which of the following words comes to mind first? a) Loss b) Uncertainty c) Opportunity d) Thrill 7. Some experts are predicting prices of assets such as gold, jewels, collectibles, and real estate (hard assets) to increase in value; bond prices may fall, however, experts tend to agree that government bonds are relatively safe. Most of your investment assets are now in high interest government bonds. What would you do? a) Hold the bonds b) Sell the bonds, put half the proceeds into money market accounts, and the other half into hard assets c) Sell the bonds and put the total proceeds into hard assets d) Sell the bonds, put all the money into hard assets, and borrow additional money to buy more 8. Given the best and worst case returns of the four investment choices below, which would you prefer? a) $200 gain best case; $0 gain/loss worst case b) $800 gain best case; $200 loss worst case c) $2,600 gain best case; $800 loss worst case d) $4,800 gain best case; $2,400 loss worst case 9. In addition to whatever you own, you have been given $1,000. You are now asked to choose between: a) A sure gain of $500 b) A 50% chance to gain $1,000 and a 50% chance to gain nothing 10. In addition to whatever you own, you have been given $2,000. You are now asked to choose between: a) sure loss of $500 b) A 50% chance to lose $1,000 and a 50% chance to lose nothing 21 11. Suppose a relative left you an inheritance of $100,000, stipulating in the will that you invest ALL the money in ONE of the following choices. Which one would you select? a) A savings account or money market mutual fund b) A mutual fund that owns stocks and bonds c) A portfolio of 15 common stocks d) Commodities like gold, silver, and oil 12. If you had to invest $20,000, which of the following investment choices would you find most appealing? a) 60% in low‐risk investments 30% in medium‐risk investments 10% in high‐risk investments b) 30% in low‐risk investments 40% in medium‐risk investments 30% in high‐risk investments c) 10% in low‐risk investments 40% in medium‐risk investments 50% in high‐risk investments 13. Your trusted friend and neighbor, an experienced geologist, is putting together a group of investors to fund an exploratory gold mining venture. The venture could pay back 50 to 100 times the investment if successful. If the mine is a bust, the entire investment is worthless. Your friend estimates the chance of success is only 20%. If you had the money, how much would you invest? a) Nothing b) One month’s salary c) Three month’s salary d) Six month’s salary 22 SCORING 1. a = 4; b = 3; c = 2; d = 1 6. a = 1; b = 2; c = 3; d = 4 10. a = 1; b = 3 2. a = 1; b = 2; c = 3; d = 4 7. a = 1; b = 2; c = 3; d = 4 11. a = 1; b = 2; c = 3; d = 4 3. a = 1; b = 2; c = 3; d = 4 8. a = 1; b = 2; c = 3; d = 4 12. a = 1; b = 2; c = 3 4. a = 1; b = 2; c = 3 9. a = 1; b = 3 13. a = 1; b = 2; c = 3; d = 4 5. a = 1; b = 2; c = 3 According to John Grable: “Average and mean scores were relatively constant over time, ranging from 25 to 27 after addition.” Even though it is not an official scoring system, it appears that the following scores are reliable with regard to risk tolerance: 18 or less = Low 19 to 22 = Below average 23 to 28 = Average or moderate 29 to 32 = Above average 33 and over = High Source: J.E. Grable and R. H. Lyton, “Financial Risk Tolerance Revisited: The Development of a Risk Assessment Instrument,” (1999) 8 Financial Services Review 163. Reproduced with permission. 23 For the purposes of applying John Grable’s risk tolerance measure, the following chart was developed by the IQPF to convert the score to a target asset allocation. Score Fixed income Growth shares 10 or under 100% 0% 11 to 15 80% 20% 16 to 18 70% 30% 19 to 22 60% 40% 23 to 28 50% 50% 29 to 32 40% 60% 33 and over 30% 70% This conversion grid is not to establish the allocation in an investment portfolio for a specific investment objective. Rather, it establishes the asset allocation that will determine the return to use in the framework defined by the IQPF long‐term projection assumptions with the objective of evaluating a client’s financial needs. Of course, a conversion grid cannot replace thorough knowledge of the client. 24 TAX SITUATION OBJECTIVES Yes No Comments Reduce income taxes Optimize after‐tax investment income Use income splitting strategies Evaluate compensation method Evaluate business structure Other DOCUMENTS Original Copy Comments Tax returns for last three years Business tax returns for last three years Notice of assessment for client and business Company’s financial statements Investment statements SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) 25 OTHER QUESTIONS Does the client have capital or non‐capital losses from prior years? Has the client declared any taxable capital gains in the last three years? Year: Amount: Has the client sold any assets since the beginning of the year? yes no If so, the following table should be completed. Net proceeds Year of of Description acquisition Quantity disposition
Adjusted Undepreciated Gain or Recapture of cost base capital cost loss depreciation 1) 2) 3) Has the $750,000 capital gains deduction for the sale of qualifying small business shares been used? If so, was the deduction used for qualifying farm property? yes no What amount? What kind of remuneration does the client receive (salary, dividends, options, premiums, retirement benefits, etc.)? 26 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to complete the Client Profile. Objective: Reduce income taxes Steps Reference Check list of main tax strategies by category Module 5 – Annexe 1 Steps Reference Determine taxation of each type of investment Module 5 – Chapter 4 Objective: Optimize after‐tax investment income Module 6 – Chapter 4 Check features of each product (e.g., ACB, UCC, carrying charges, etc.) Module 5 – Chapters 4 and 7 Module 6 – Chapters 4, 4A, 4B and 4C Choose products based on tax features (registered plan, Module 5 – Chapters 10 and 24 corporation, personal account, etc.) Module 6 – Chapters 4, 4A, 4B and 4C Objective: Use income splitting strategies Steps Examine the taxation of family members and the business Reference Module 5 – Chapters 9, 10 and 11 structure (corporation, trust) Estimate tax and financial savings of setting up an income Module 5 – Chapters 9, 10 and 11 splitting strategy (pension income splitting, dividends to adult children directly or through a trust) 27 Objective: Evaluate compensation methods Steps Reference Depending on the client’s professional status (employee, Module 5 – Chapters 16, 24.2 and entrepreneur, partner or shareholder), evaluate current and 26 future methods of compensation Objective: Evaluate business structure Steps Reference Determine current business structure Module 5 – Chapters 16 and 21 Evaluate possible changes (incorporation, creation of a holding Module 5 – Chapters 16 and 21 company or trust) 28 CHILDREN’S EDUCATION FUNDING SITUATION OBJECTIVES Yes No Comments Help children or grandchildren pursue higher education Other DOCUMENTS Original
Copy Comments RESP contract RESP investment statements Other QUESTIONS 1st child 2nd child 3rd child Name Date of birth Projected annual cost Number of years of education Accumulated RESP amount INSTITUT QUÉBÉCOIS DE PLANIFICATION FINANCIÈRE
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SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to complete the Client Profile. Objective: Help children or grandchildren pursue higher education Steps Reference Registered education savings plan (RESP) Module 4 – Chapter 18 Canada Education Savings Grant (CESG) Module 4 – Chapter 18A.4 Quebec Education Savings Incentive (QESI) Module 4 – Chapter 18A.5 Calculate required annual savings Module 1 – Section 5.5.4 30 RETIREMENT PLANNING SITUATION OBJECTIVES Yes No Evaluate RRSP, RRIF and annuity payout options. Choose between a defined benefit pension plan or transfer to a LIRA. Business: set up an individual pension plan. Other Retire at age . Maintain a cost of living of $
, an annual income of $ , in today’s dollars. Comments DOCUMENTS Original
Copy Comments Annual pension plan statement of contributions RPP option statement QPP statement of participation Investment statements (RRSP, TFSA, non‐registered, etc.) Federal income tax notice of assessment Tax returns (client and spouse) 31 SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) QUESTIONS Client Spouse Yes No Yes No Does the client participate to a pension plan, registered pension plan, group RRSP, DPSP, supplemental pension plan, stock option plan, etc.? Does the client always contribute the annual maximum to an RRSP or spousal RRSP? If not, how much does the client contribute each year? ____________________________________________ When does the client make the RRSP or spousal RRSP contributions? End of the year Beginning of the year Systematic savings program 32 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to: 1. Complete the Client Profile 2. Determine the Investor Profile 3. Use economic and demographic assumptions based on the IQPF Projection Assumption Standards Objective: Determine savings required or feasibility of retirement objective Steps Reference Determine or confirm cost of living Module 7 – Section 3.2.3 Identify sources of income • QPP Module 7 – Section 4.2 •
OAS, GIS, EI •
Defined contribution pension plan •
Defined benefit pension plan •
RRSP or RRIF •
LIRA or Locked‐in RRSP or LIF Determine savings required Module 7 – Section 4.3 Module 7 – Section 5.4.4 Module 7 – Section 5.4.5 Module 7 – Chapter 6 Module 7 – Section 5.7 Module 1 – Annexe of Annexe 1 Steps Reference Determine or confirm cost of living Module 7 – Section 3.2.3 Evaluate various payout options Module 7 – Section 6.6 Objective: Evaluate RRSP, RRIF and annuity payout options Objective: Choose between a defined benefit pension plan and transfer to a LIRA Steps Reference Calculate or confirm the transfer value Module 4 – Chapter 12 Module 7 – Section 5.4.9 Determine level of risk tolerance Investor Profile Analyse options Module 7 – Section 5.10.2 33 Objective: Set up an individual pension plan (IPP) Steps Reference Assess advantages and disadvantages of an IPP Module 7 – Section 5.14 Evaluate set‐up criteria Module 7 – Section 5.14 34 ESTATE PLANNING SITUATION OBJECTIVES Yes
No
Comments
Draw up or review the will Minimize taxes payable on death Determine life insurance needs •
Maintain current standard of living for heirs •
Provide additional legacies to heirs •
Arrange other legacies, such as to a foundation Business: safeguard business continuation after death
Other ________________________________
DOCUMENTS Original
Copy
Comments
Will Marriage contract Individual life insurance contracts Group insurance brochure Tax returns for last three years Business tax returns for last three years
Financial statements of the business Shareholders agreement Other ________________________________
35 SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. (Client’s signature) (Financial planner’s signature) QUESTIONS Client Spouse Yes No N/A Yes No N/A Does the client have a will? Does the client have a marriage (or civil union) contract with a “joint and last survivor” clause? Does the client’s will still reflect their last wishes? Does the client want to leave a bequest to a charitable organization? Has the client made funeral arrangements? At how much are the death‐related expenses estimated? How long will the client need to provide income for the heirs? Does the client have life insurance? Are the client’s loans life‐insured with the lending institution? Business Does a corporation have insurance on the client’s life? Has the client signed a shareholders agreement? 36 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to: •
Complete the Client Profile •
Establish the Estate Balance Sheet and calculate taxes payable on death •
Establish a Statement of Cash Position the Estate and calculate taxes payable on death •
Use economic and demographic assumptions based on the IQPF Projection Assumption Standards Objective: Draw up or revise the will Steps Reference Identify the legatees or legal heirs Module 2 – Chapter 4.2 Is the will structured to reduce income taxes on death and in Module 5 – Chapters 14 and 15 the years following death? Assess the advisability of setting up a testamentary trust Module 2 – Chapter 4.6 Are the life insurance beneficiary designations consistent with Module 2 – Chapter 4.3 the conditions of the will? Objective: Determine life insurance needs Steps Reference Assess the need to maintain the heirs’ cost of living Module 3 – Section 2.2.1 Consider the objectives of: • Maintaining capital after death Module 3 – Section 2.2.2.1 Module 3 – Section 2.2 •
Other legacies Determine life insurance needs Determine whether current life insurance coverage suits the Module 3 – Section 2.6 and client’s situation Chapter 6 37 Objective: Minimize income taxes payable on death Steps Reference Consider the types of income Module 5 – Chapter 14.2 Consider the types of assets and tax repercussions of their Module 5 – Chapter 14.5.2 disposition Module 5 – Chapter 14 Other factors to consider: • Death benefit Module 5 – Chapter 14.5.1 Module 5 – Chapter 14.5.2 •
Medical expenses •
Charitable donations •
Unused capital gains exemption •
Deferred capital losses •
Rights or things •
Separate returns •
RRSP Module 5 – Chapter 14.6.5 •
Partition of the deceased’s assets Module 5 – Chapter 14.6.6 Module 5 – Chapter 14.5.3 Module 5 – Chapter 14.6.1 Module 5 – Chapter 14.6.2 Module 5 – Chapter 14.6.3 Module 5 – Chapter 14.6.4 Objective: Safeguard business continuation after death Steps Reference Analyse shareholders agreement and current will Module 2 – Chapters 3.7 and 3.8 Assess need for life insurance to buy out shares Module 2 – Chapter 3.8 Module 5 – Chapters 15 and 22 Module 3 – Section 6.4 38 PROTECTION SITUATION OBJECTIVES Yes No Comments Draw up or review the mandate in case of incapacity Draw up or review the general power of attorney Review personal disability protection Review business‐related disability protection Review other personal illness or accident protection Review other business‐related illness or accident protection Other DOCUMENTS Original
Copy Comments Mandate in case of incapacity General power of attorney Group insurance brochure Disability insurance contract Other illness or accident insurance contracts SERVICE CONTRACT After our meeting, we will analyse the outlined objectives and develop an action plan. If necessary, we will formulate recommendations related to the selected objectives. Only the objectives identified above will be analysed. Our responsibility is limited by the documentation and information provided. Our recommendations will be based on certain assumptions and will have to be reviewed from time to time to reflect your changing social and family situation, changes to tax and other laws, and the fluctuations of the economy and the financial markets over time. The fee for the present contract will be $______. 39 (Client’s signature) (Financial planner’s signature) QUESTIONS Client Conjoint Yes No N/A Yes No N/A Does the client have a mandate in case of incapacity? If not, whom does the client want to name as mandatary? Does the client have a general power of attorney? If not, whom does the client want to name as mandatary? Does the client have a shareholder agreement? Does the client have disability insurance? Does the client have other illness or accident insurance (including critical illness and long‐term care)? Are the client’s loans insured against disability or critical illness through the lending institution? What are the deductibles on the house and car insurance? 40 POINTS OF ANALYSIS FOR THE FINANCIAL PLANNER BASED ON THE CLIENT’S OBJECTIVES For all objectives, it is crucial to complete the Client Profile. Objective: Draw up or review the mandate in case of incapacity Steps Reference Examine the type and possible forms of the document Module 2 – Chapter 2.13.1 Determine who will be the mandatary or mandataries Module 2 – Chapter 2.13.3 Examine the various issues to include in the document Module 2 – Chapter 2.13.1 Determine the type of administration required Module 2 – Chapter 2.13.2 Examine the implementation procedures Module 2 – Chapter 2.13.4 Steps Reference Examiner the type and possible forms of the document Module 2 – Chapter 2.14 Determine who will be the mandatary or mandataries Module 2 – Chapter 2.13.3 Objective: Draw up or review the power of attorney Examine the limits and scope of the document compared to the Module 2 – Chapter 2.15 mandate in case of incapacity Determine the type of administration required Module 2 – Chapter 2.13.2 Steps Reference Determine disability insurance needs Module 3 – Chapter 2.1 Objective: Review disability protection (personal and business) Objective: Review illness and accident protections (personal and business) Steps Reference Evaluate health insurance needs Module 3 – Chapter 2.3 41