Interesting year! They found Red October – it followed Slippery September. This echoes the drop in January/February, giving us two corrections in one year. It’s like a weightlifter who lifts a barbell, and then steps back to let gravity over with a crash. On the left is a hole where Jan/Feb dropped 10%. On the right is where Sept/Oct dropped 10-12%. These are entirely natural events and help to re-balance the excesses mentioned last month. We’re moving upward again, and over time we gain healthy returns and expanding wealth.
Today’s letter moves into ELDERCARE which we haven’t touched in over a year. Every family goes through times of caring for a major dependency, whether aging parents, or accident/illness of a spouse or child. Certainly this is NOT just about elders because age alone won't determine when families need more support. So while I mention eldercare please remember this can apply as we care for dependants at any age. In December we'll share more also about Disability Tax Credits and how to use Registered Disability Savings Plans especially for ages 0-to-49.
NEW REALITIES IN ELDERCARE.
I was a teenager when grandparents of my friend Rick moved from Saskatchewan to the family’s basement in Victoria (ground floor access). I enjoyed visiting them, hearing stories, and seeing how they appreciated our youthful antics. Unknown to me, behind the scene there were ongoing daily demands of “eldercare” to assist their immobility and illness. Today of course there’s a vast industry of eldercare outside the family, because people have had fewer children, families live at greater distances, and the “aged” prefer to remain with their own communities and friends. Senior living now has a variety of names and services, ranging from $3,000 to $12,000 or more per month.
Legal issues can be more thorny than cost of care. Consider if elderly parents, needing help in personal care and financial decisions, have given one or two people the Powers Of Attorney while other family members disagree on the POA's actions. Sibling rivalries can inject conflict instead of peace, harming the future of family relationships. Children can end up in court where litigation further stresses the family and siphons away the savings which naturally were intended for personal care and family estate. (Ref: Foley v. McIntyre began in 2003, later reached Superior Court in 2013, and an appeal in 2015, costing near $1,000,000.) There must be a better way!
ELDERCARE DISPUTE RESOLUTION.
Eldercare Dispute Resolution (EDR) is helping to regain harmony and cut costs. This is a logical three-step process. (1) It begins with a professional assessment of needs, capacities, and the roles of various family or other persons, in order to foster a comprehensive action-plan. (2) A designated mediation team meets with the senior/s and related parties to navigate outstanding issues and reach consensus for best action and results. (3) Family &/or professional support now follow the resulting agreement, with the mediator available as/when needed further.
Results: (1) Preserve and enhance the care that is best for older family member(s). (2) Protect and support the health of family relationships. (3) Eliminate contention and costs of proceeding to court. Mediation is faster and costs less. It focuses on immediate results and healthier relationships. When people can reach a satisfactory agreement, every member of the family can win.
Chief Justice Warren Winkler (Ontario) had a personal mission to require that family law disputes would have to begin with mediation before ever landing in court. Legislation can move slowly so he actually retired before achieving his goal. Every family however has the option to use EDR. Recently the Lawyer’s Daily (April 13/18) describes EDR as a valuable concept to reduce costs and resolve disputes, quickly and efficiently. Managing the crisis and resolving any conflicts helps ensure care and harmony that are vital those receiving care.
We surely realize our aging society and our personal longevity naturally increase the incidence of dementia and other cognitive disorders. This can present an overwhelming array of decisions for healthcare, financial and legal matters, accommodation, personal comfort and caregiving – sometimes with less than 24 hours’ notice! Family can complicate all this with differing emotions and expectations, memories, and sentiments about price and a desired level of care. This can be the biggest mine-field when parents failed to offer advance clear guidance, or where one or more siblings disagree with the others. As an added complication 50% of our families have no Wills, and over 70% have no Powers Of Attorney (for personal care and for property).
Susan Hyatt is a pioneer in EDR and her firm Silver Sherpa is an available resource for our clients. She describes this as counseling / consulting a conflicted family group to reach healthier and cost-effective healthcare in the event of chronic health decline, loss of a spouse, or any number of financial issues.
More resources: we can connect with Susan Hyatt of Silver Sherpa, Paul Iacono LLB of YorkStreet Resolution Group.
TEASER FOR NEXT MONTH: RDSPs.
Many families have someone with a disability (at any age) who could qualify for the Disability Tax Credit. Anyone from birth to age 49 who qualifies for DTC can also open a Registered Disability Savings Plan. Many advisors and firms have left this opportunity under a stone. We have clients whose families are benefiting tremendously – and it could be highly valuable to other families who didn’t realize how to apply for the RDSP and qualify for federal grants and bonds. More on this soon! Meanwhile consider whom you know that could benefit in learning about this.
December markets on average rise near 2%. Some fondly call it the Santa Claus rally. Every year there are reasons why it may fail, and here in 2018 it could be a combination of interest rates gradually lifting to more normal levels, persistent trade uncertainties, anticipated gridlock in Washington, and our prairie oil production in search of a pipeline. Yet corporate earnings are at a phenomenal high, and trade uncertainties should settle meaningfully by this coming spring.
12-month returns as I’m writing this have Canada’s TSX market down 8%, banks down 4%, utilities down 9%, renewable energy down 12%, oil and gas down 17%, gold down 20%, income trusts up 0%, real estate up 5%, info-tech up 14%, health up 45% (cannabis), and the volatility index up 48%. Europe is broadly down 12%, Emerging markets together down 20%, and China down over 25%. Half a dozen American stocks, now $4Trillion between them, are primarily responsible for U.S. index growth this year (though several are down 25% in recent weeks) and most U.S. firms remain sub-zero this year.
When we look back we’ll see 2018 as part of a transition away from ecstatic growth, to ignite a dynamic recovery among earnings-rich enterprises, large and mid-sized “value-oriented” positions among Canadian and International banks, industrials, cyclical commodities etc. While 2018 paused we've kept risks modest and our boat afloat. When recovery moves forward we’ll have a very profitable year ahead.
Freely share this letter whenever it can help a neighbour or friend, and ease the concerns of someone you know. Introduce us -- we love to help.
Yours in Financial Security for LIFE!
Brian Weatherdon, MA, CFP, CLU, CPCA. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7. 1-877-937-3500