HomeMy WebLinkAboutThe Citizen, 2002-02-20, Page 9INCOME
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Protecting Your Interests
BEWARE OF RRSP SCAMS
Ontario
RRSP LOANS
at Prime 1.5%
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224 Josephine St., WINGHAM • 357-2669
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DID YOU KNOW
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48 Ontario St., Clinton
Tel. (519) 482-3466
Mon.-Thurs. 9 am-5 pm
Fri. 9 am-8 pm
118 Main St. N., Exeter
Tel. (519) 235-0640
Mon.-Thurs. 9 am-5 pm
Fri. 9 am-8 pm
veww.clinton.on.cu
A different way of banking.'
Clinton Community
Credit II
THE CITIZEN, WEDNESDAY, FEBRUARY 20, 2002. PAGE 9.
$$$$$Ss$Ss$$$
Exercise your rights with a will
(NC)—Writing a will is one of those
responsibilities many people put off
indefinitely. But the fact is, nobody
should be without a will.
A will gives you the unique
opportunity to exercise your rights
and to decide where your assets go. If
you make use of this right nothing
will be left open to misinterpretation.
Your wishes will be respected.
If there is no will, your estate will
be distributed according to the laws
of the province where you live.
These laws are inflexible and may
not take into consideration the care
At this time of year many investors
are making decisions about their
Registered Retirement Savings Plan
(RRSP) contributions. The recent
economic slowdown has left some
Ontarians in need of cash to get them
through the hard times. An
advantage of RRSPs is that the cash
invested can be withdrawn early if it
is needed, subject to a tax penalty.
There is one type of Retirement
Savings Plan where withdrawal is
not so simple — a Locked-In
Retirement Account (LIRA). Except
in certain cases you cannot
withdrawn funds from a LIRA until
you reach the designated age,
usually 55 or older.
A new breed of scam artists is
preying on people anxious to get at
their locked-in funds. Beware of
investment schemes that promise to
give you access to money tied up in
LIRAS. Newspaper ads promoting
these scams are appearing more
frequently, and often follow this
pattern:
A promoter advertises an 'RRSP
Loan' that lets you take advantage of
of a supposed loophole in the tax
laws to access your locked-in funds.
The promoter instructs you to
liquidate your current LIRA
holdings, usually to purchase shares
of a start-up company of the
promoter's choosing. The promoter
promises to loan you 60 - 70 per cent
of the value of the investment,
keeping the balance as a fee. You are
told you will get ready cash, with no
tax consequences, and still hold a
valuable investment in your LIRA.
The reality is that the stocks the
promoter recommends are virtually
worthless. You often get no funds
from the promised loan, and you
may be forced to pay tax on the
deregistered money even though you
did not receive it. There is no tax
loophole that allows you to use the
money in a locked-in retirement
plan. The end result is that your
of people or organizations you wish
you remember. The way to ensure
your wishes are followed is to have a
will.
Aren't provincial laws adequate
for most situations?
No, because they're impersonal.
They don't make exceptions, and
property is distributed according to
an all-purpose plan. They may
deplete your estate unnecessarily, for
example, requiring that a court-
appointed administrator be bonded.
The laws also `fly blind' trying to
guess your desires concerning who
retirement savings are gone, and you
may have violated federal income
tax law.
How can you avoid this type of
scam? Use the following tips as a
guide:
• Check with an independent
specialist if there is any claim of a
tax loophole.
• Check that any securities you are
being offered are legitimate and
RRSP eligible.
• Know the tax consequences of
using the funds in your LIRA.
• Read the prospectus, and make
sure you understand what you are
investing in.
• Understand the financial position
of the company you are investing
-in.
• Make sure that the investment
matches your risk tolerance
profile.
• Consult with a professional
financial advisor on the suitability
of the investment.
If you are truly in need of your
locked-in money, contact the
Financial Services Commission of
Ontario at 416-250-7250 to find out
if you qualify to withdrawn the funds
from your LIRA.
The Ontario Securities
Commission - administers and
enforces Ontario's
securities law. Its
goals are to protect
investors from
unfair or improper
practices and to
foster fair and
efficient capital markets. One of the
ways the OSC protects investors is
by offering a range of educational
materials to investors free-of-charge.
To obtain an Investor Education Kit
call our Contact Centre at 416-593-
8314, toll free 1-877-785-1555, or e-
mail us at: inquiries@osc.gov.on.ca
You can also review the materials
on the Investor Resources page of
our website www.osc.gov.on.ca
should be your administrator, or who
should be guardian of your children
if they are minors.
They also cannot make charitable
bequests or gifts to causes such as a
health charity or Greenpeace which
you supported in your lifetime. Only
a personal will can do that.
Don't only wealthy people need
wills?
This is a cortimon misunder-
standing. In fact the smaller the
estate the more important it be settled
quickly to avoid additional expense.
This can only happen with a properly
written will.
Don't only people with
troublesome relatives need wills?
Wrong. Even family members with
the best intentions may be puzzled
and confused as to what your wishes
may have been in the absence of a
will.
Isn't it expensive to have a will
prepared?
Wills are usually less costly than
people expect and definitely less than
the emotional and financial cost of
not having a proper will.
Lawyers charge for their time and
--knowledge, so the more time you can
save them, the less the cost will be.
Here are three
simple steps
you can take to
save money:
• make a list
of all your
property
including real
estate, bonds, savings accounts,
RRSPs, jewelry, family heirlooms
and works of art — everything.
• list the people you want to .
provide for, along with their ages,
addresses and their relationship to
you.
• name your executor and
alternative executor (preferably both
younger than yourself), and suggest a
guardian for your children if they're
minors.
For a free copy of the guide
"Questions & Answers About Wills"
which also lists in detail the full
duties of an executor, please write:
Greenpeace Canada, 1726
Commercial Drive, Suite 200,
Vancouver, B.C. V5N 4A3.
- News Canada
My Will .
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