Weekly Economic Update

For the week of November 6 – 10.

It will be a fairly quiet week for Canadian economic data with housing data being the prominent release this week. October housing starts are expected to slow to 210.0k after a revised 217.3k September posting, while September building permits are expected to edge up 0.1 percent month-over-month after declining 5.5 percent in August. On the new housing front, prices are expected to have increased by 0.2 percent month-over-month in September after a slight increase of 0.1 percent in August.

Economic data releases in the US will also be on the lighter side this week. The final print of September wholesale inventories will be released, as well as the preliminary November University of Michigan Sentiment figures. Wholesale inventories are expected to have increased 0.3 percent in September, the same pace as the preliminary release. Sentiment is expected to remain relatively similar to October levels.

US factory orders rose 1.4 percent in September, beating expectations of 1.2 percent. Excluding transportation, September’s increase was 0.7 percent. Durable goods orders came in as expected, rising 2.0 percent, after a 2.2 increase in August. The ISM non-manufacturing composite came in stronger than expected in October, rising to 60.1 from 59.8. Expectations were for a decline to 58.5. This index includes construction services, which thrived in October as post-hurricane rebuilding efforts boosted business sentiment.

The Canadian dollar is trading relatively flat to the US dollar this morning. Today’s expected range for the Canadian dollar is 1.2707 – 1.2807.

Source: Bloomberg

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Executors: What You Need to Know about Probate

Probate[1]. What is it? When is it required? Why is it required? In this post, we’ll discuss probate and its role in the estate administration process.

What is it?
Merriam-Webster defines probate as “the action or process of proving before a competent judicial authority that … the last will and testament of a deceased person is genuine”.

More simply put, probate is a court grant that ratifies the appointment of the nominated executor and acknowledges under the court’s seal that the Will has been properly executed and proved before the court that it is the deceased’s ‘last Will’.

When is it required?
Not all estates require that the Will be probated. But there are a multitude of reasons why it would be requested. Although not a comprehensive list, here are a few of the instances where probate could be required:

  • Real property is solely owned or as tenants in common by the deceased.
  • A transfer agent requires probate to deal with shares held in a publicly traded company.
  • A financial institution requests probate in order to release funds held on deposit.
  • A testamentary trust is established under the Will.
  • There are beneficiaries under the age of majority.
  • The executor has pre-deceased or renounces and no alternate executor is named.

Why is it required?
Obtaining probate is a process that protects the executor in the event a newer Will is found. If probate is not obtained and the assets distributed and a newer Will is later discovered with a different distribution scheme, the executor could be liable.

Financial institutions establish policy for determining whether probate is required to release the funds held at their organization. It is often based on how the account is registered and the value of the asset. As with the executor, probate mitigates the financial institution’s risk when releasing funds.

Applying for Probate
Each province has prescribed forms that must be completed to exact standards with respect to details about the deceased and the beneficiaries. In most provinces an inventory of the deceased’s assets and liabilities establishing the value of the estate is required. The original Will accompanies the application to the court along with the required probate fee[2]. Once granted, probate legally authorizes the executor to proceed with administration of the estate.

The Myths
One myth surrounding probate is that probate fees are charged on the entire estate. Probate fees are only charged on assets that will be distributed through the Will. Assets that are considered non-probatable, and therefore not subject to probate fees, include life insurance policies, pension plans and registered plans where a beneficiary other than the estate has been designated.

Another myth surrounding probate fees is that they are excessively high. Admittedly, there are provinces that do have probate fees higher than others, but the fees range from 0.4% (even lower in Alberta) to around 1.7 %. On a $1,000,000 estate the highest probate fee payable in Canada would be approximately $17,000.

It is always prudent to reduce the probate fees the estate will pay through proper estate planning; however, there are times when the cost of avoiding probate may be higher than the probate fees incurred at the time the estate is administered. Discussing options with an estate professional should be done before implementing any strategies to reduce probate fees.

[1] Certificate of Appointment of Estate Trustee (Ontario)
[2] Estate administration tax (Ontario)
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Weekly Economic Update

For the week of October 30 – November 3.

In the Canadian economic data docket this week, we will see two big releases: August GDP figures and October employment numbers. After increasing 3.8 percent year-over-year in July, consensus is for a 3.5 percent increase for August. Month-over-month GDP expectations are for a slight advance of 0.1 percent versus flat growth a month prior. On the employment front, the economy is expected to have added 15k in jobs in October versus the 10k created in September. Consensus for the unemployment rate remains at 6.2 percent, unchanged from the prior month.

Lots of data is scheduled to be released in the US this week. Personal spending and income figures will be out this morning. By mid-week, ISM manufacturing will be released as well as the FOMC’s rate decision. Consensus is for the Fed to keep rates unchanged at 1.00-1.25 percent. Wrapping up the week, the US will also release its employment numbers as well as other manufacturing figures. After losing 33k in jobs in September, the US economy is expected to add 310k in October. The unemployment rate is expected to remain unchanged at 4.2 percent.

The TSX closed at a record high on Friday at 15,953.51, now up 4.4 percent on the year, as the Bank of Canada continued to talk down rate hike expectations. According to a Bloomberg survey, many economists that once called for another rate hike before the end of the year now see this rate hike pushed into next year. Canadian yields have fallen another basis point across the curve this morning. The Canadian dollar slipped below 78 US cents this morning and is down from the high of 82.6 US cents back on September 11 (closing level).

Today’s expected range trading range for the Canadian dollar is 1.279 – 1.289.

Source: Bloomberg

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Weekly Economic Update

For the week of July 24-28.

It will be a quiet week for data in Canada outside of two larger releases for wholesale trades and GDP. May GDP figures will be released on Friday and will be following growth postings of 0.2 and 3.3 percent on a month-over-month and year-over-year basis respectively for the month of April. In the United States, releases are expected for new home sales, wholesale inventories, quarterly GDP, and personal consumption. In addition to these US data releases, the Federal Reserve also has a policy meeting this week with the announcement expected on Wednesday.

Inflation figures released in June for Canada aligned with expectations, while retail sales releases exceeded expectations. Consumer prices released in June also aligned with expectations by falling by 0.1 percent on a month-over-month basis, while year-over-year growth fell short of expectations at 1.0 percent. Retail sales grew by 0.6 percent on a month-over-month basis in May. Expectations were calling for growth of only 0.3 percent for the month. However, once car sales were removed from the data, sales fell by 0.1 percent.

Oil prices are being affected as OPEC and non-OPEC members are not looking to deepen current cuts. Although further cuts seem to be off the table, there may a be discussion of capping the production of Libya and Nigeria. Both countries were exempt from the original production cut agreement, but have been growing production levels significantly since that time. Prices are currently up by 0.83 percent.

The Canadian dollar is trading relatively flat against the US dollar this morning. Today’s expected range is 1.2477 – 1.2577.

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Weekly Economic Update

For the week of July 17 to 21.

Data expected out of Canada this week will be centered on Friday, with the release of consumer prices for the month of June and retail sales for May. Consumer prices grew by 0.0 percent on a month-over-month basis and 1.1 percent on a year-over-year basis. Retail sales grew by 0.3 percent. Releases will also be occurring for international security transactions and manufacturing sales. Releases in the United States this week will occur for empire manufacturing, housing starts, and building permits.

According to last Friday’s release, inflation growth is slowing down, indicating that consumer prices did not grow from May’s level. This slow-down is likely to be an important topic of discussion for the Federal Reserve, who is looking to continue to raise interest rates in the United States. The Federal Reserve is expected to remain on hold for some time, with at least a 50 percent implied of an interest rate hike not occurring until March of 2018.

The Canadian dollar continued to see strength on Friday by improved oil prices and the recent interest rate hike by the Bank of Canada. The currency crossed the level of CAD/USD .7900 on Friday for the first time in more than a year. The Canadian dollar is currently trading slightly down against the US dollar this morning.

Economic growth surpassed expectations in China for the second quarter of 2017. GDP levels grew by 6.9 percent, higher than the economists’ expectations of 6.8 percent.

Source: Bloomberg

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