Financial spring cleaning

The eight-step method to de-cluttering

Many of us feel overwhelmed when it comes to keeping our financial affairs up-to-date and in order. Whether it is technological challenges, including accessing the information we need through a portal when it used to come automatically through snail mail, new legislation, and increasing tax compliance or keeping our estate planning up-to-date, many of us feel an increased burden, more pressure, and struggle to keep on top.

How can we remove the clutter and organize our affairs to give us a sense of control and peace of mind? Now that personal tax season is finally at an end and spring is here, this is a perfect time to do your spring financial house cleaning before summer arrives and get your financial affairs in good shape.

Many of us have heard about and used the Marie Kondo method called KonMari to declutter our homes. Is there a similar approach we can use for our financial affairs? Here is my attempt to set out a few rules, modeled in part on the KonMari Method.

1. Commit yourself to “tidying up” and organizing your affairs and keeping them organized. It is not a one-time thing, but an approach that requires a process so your affairs are kept organized on an ongoing basis. Set aside a time and date to start.

2. Imagine your ideal personal financial world. Do you have too much complexity for your needs or not? Does it make sense to simplify? Or are you comfortable with how your affairs are presently organized?

3. Discard what you don’t need. Make a list of all of your assets by category including their values: bank accounts; registered accounts; non-registered accounts; real estate; insurance policies; private equity interests; collectibles; credit cards; liabilities; etc., and do a thorough review.

4. In each category “tidy up.” Are there bank accounts that can be consolidated? Think of the fact that you will eliminate each year all of those extra bank statements and tax slips you need to keep track of.

• What about your registered accounts? Is there a need to have more than one RRSP account? Did you create more than one for which there is no current purpose and they can be consolidated?
• The same for multiple non-registered investment accounts, many small, all scattered among various financial institutions.
• Real estate can be a more challenging issue, but if for example, you own a vacation home you seldom use now but are paying all of the annual expenses for, is it time to “let go”?
• Insurance is another challenge – is it time to review your policies with your agent and decide what should be continued and set dates for periodic reviews based on key anniversary dates? Read more: Integrating Life Insurance in the Estate Plan (2017).
• Are there any private corporations that need their annual maintenance updated, or if they no longer serve a purpose, should they be wound up?
• And what about all of those credit cards – can you streamline them down to two or three?

5. Review your estate planning and set a date for a periodic review (at least every three to five years or earlier if there is a material change in your circumstances). Read more: Keeping Things Up to Date (2017), Keeping Your Estate Plan Healthy with Periodic Checkups (2015).

6. Create a list of all of your critical information and set a date for when it is to be updated – such as annually – and inform close family members where it is kept. Read more: Whom to Inform About Your Estate Plan (2022).

7. Once you have completed all of the above steps, create an action plan with a list of “to-do’s” and dates to complete them, and set aside a time and date to do so in your personal calendar.

8. Once you have completed and implemented all of the above, ask yourself the Marie Kondo phrase, “Does it Spark Joy?” Or if not joy – perhaps at least peace of mind!

We all have regular schedules for things like lawn maintenance, furnace service, and dental hygiene, but few of us have such a schedule when it comes to our personal financial affairs. No wonder many of us feel that our affairs are not in the order we would like.

Hopefully, the above rules modeled on the KonMari Method will help to achieve this sense of order – and yes, even spark some joy in leaving an organized estate!

Margaret O’Sullivan is Managing Partner of the Toronto-based trusts and estates law firm O’Sullivan Estate Lawyers. She practices exclusively in the areas of estate planning, estate litigation, advising executors, trustees and beneficiaries, and administration of trusts and estates. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.

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The foregoing is for general information purposes only and is the opinion of the writer. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.

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