Experts say, don’t procrastinate writing a will

By Craig Wong


OTTAWA _ It could be the most important document people write, and they won’t be alive to see it through.

Writing a will may be at the bottom of many to-do lists, but financial and legal experts say that laying out your wishes can ensure your money goes where you want and may save your estate from unnecessary bills after you’re gone.

Carol Harding, a wealth adviser with CIBC Wealth Advisory Services, says having a will is like having insurance.

“Hopefully nothing happens,” she said. “But if something does happen, at least you’ve got the right paperwork in place to help the assets go to the right place.”

When people die without a will, it is considered intestate and the courts will appoint an executor to administer an estate with the assets distributed according to the rules laid out provincially.

“What may happen is that there are assets allocated to children that might be needed for other purposes,” Harding said.

“If assets are transferred to a spouse for example, RRSPs they can transfer without being taxable, where if you have RRSPs and they are transferred either to a child or to a sibling, that becomes taxable income.”

Tina Garbas-Tyrrell, a wills and estates lawyer at Burke-Robertson, says before people draft a will they need to consider issues like who they want to administer the estate and, in the case of those who have young children, who will become their guardian.

They also need to have a good idea of their debts and assets, including RRSPs, TFSAs, property and other investments and how those should be divided.

“We want to know: What kinds of assets do you have? What kinds of debts do you have and where do you want your wealth to go?” she said.

Garbas-Tyrrell said if someone holds their accounts jointly with a spouse, that can make things easier if they don’t have a will. But if something happens to both spouses, their estate would be left without clear direction.

“If you are both on a plane and the plane goes down and both of you are gone, where does your wealth go?” she said.

Without a will, there may also be additional costs that could add up even if people don’t have a big estate, Garbas-Tyrrell said.

“If that’s sitting in a bank account, it’s quite possible that the bank will require you to probate or get a certificate of appointment, which means your loved ones to release those funds can end up incurring $2,000 to $3,000 in legal fees,” she said.

“Whereas if you had a will it could have been released by the bank without any additional fees.”

And if the situation is challenged, legal costs would drive that even higher and far beyond the cost it would have been to prepare a will.

Wills can be written by hand and signed or done using kits, but Harding said while that may be better than nothing, people may miss out on some options they might not have considered.

“Sometimes those wills too are delayed in court because if there are different parties interested, they seem to be delayed because there may be more arguments,” she said.

It is also about more than money.

Harding noted that if people have children and die without a will, the courts will have to decide who will become their guardian.

“So even though you may not have a lot of assets, that’s one big thing to think about and anybody that has children should have a will solely for that purpose.”


Rexall takeover shakes up Canada’s drugstore industry

U.S. health-care-services giant McKesson Corp. is taking on the heavyweights of Canada’s drugstore industry with a $3-billion deal for the Rexall pharmacy chain and related companies.

McKesson of San Francisco, which already owns smaller drugstores in Canada and supplies drugs to Rexall and other pharmacies, is adding to its size and buying power by acquiring the 470 Rexall stores. It gives Rexall more heft in its fight with industry leader Shoppers Drug Mart, which was acquired by grocery titan Loblaw Cos. Ltd. for $12.4-billion two years ago.

The move also potentially puts more pressure on smaller regional players and independents, many of which are supplied by McKesson and see it becoming an even bigger retail competitor with the latest deal. At the same time, all pharmacies are feeling the pinch of provincial generic drug reforms that squeeze drugstore profits.

“I think it will put pressure on the whole industry,” said Clint Mahlman, chief operating officer of retailer London Drugs Ltd. of Richmond, B.C., which is supplied by McKesson.

It is “a considerably large-size player in the distribution of wholesale drugs … It definitely has the potential to be a conflict, for sure. But it’s also not unusual that we see suppliers becoming competitors in all markets these days.”

As one of just two major national distributors of drugs to pharmacies, McKesson is betting that its acquisition of Rexall, the second-largest pharmacy chain after Shoppers, will help it improve its financial situation and steal customers.

Still, it will need to navigate some sensitive issues with other retailers that it supplies while trying to build its retail and distribution strength.

McKesson executives didn’t comment directly, although spokesman David Simmonds said “together with Rexall, McKesson will be able to increase our supply chain expertise through a deeper understanding of pharmacy operations. This deal extends the ability of both companies to provide access to best-in-class pharmacy care with an expanded retail footprint.”

David Francis, an analyst at RBC Dominion Securities, said McKesson has eschewed deals in the past that have the optics of putting the company in competition with its competitors. This approach has “handcuffed” McKesson “to a meaningful degree in looking at transactions that could add strategic value to the business,” he said.

“The purchase of Rexall is a clear shift in this approach” and could signal that other transactions or partnerships in the North American retail pharmaceutical market could now be on tap for McKesson, Mr. Francis said in a note.

McKesson is no stranger to Rexall and its parent Katz Group, having supplied it for two decades. And in 2012, McKesson bought Katz’s 1,100 franchised stores (including IDA and Guardian) for $920-million as Rexall focused on its corporately owned Rexall outlets. Subsequently, Rexall became an attractive takeover target for rivals such as U.S. titan Walgreen Co. and McKesson.

As part of the latest acquisition, McKesson plans to buy Rexall Health’s entire business, including the Medicentres Canada health clinics and ClaimSecure, a health care management firm that deals with insurance firms’ drug claims.

London Drugs’ Mr. Mahlman said McKesson’s role with insurance companies could give it more clout in the market. Mark Satov of retail specialist Satov Consultants added that McKesson’s ownership of the health-care management firm could eventually help reshape the landscape if the firm began to encourage companies to use Rexall as a “preferred provider” of medications through their employee benefit plans.

And Jim Danahy of consultancy CustomerLAB said the Rexall deal could have long-term implications by shifting more Canadian health care to pharmacists, saving governments billions of dollars. He said the acquisition could create a “space race” between McKesson’s growing empire and its huge Shoppers-Loblaw rival. They already have been pushing provinces to give pharmacists more authority to prescribe drugs and carry out other basic health care for customers. “Both companies have the scale and resources to radically accelerate community-based health care reform in Canada.”

Rexall Health provided signs that it may be looking for a suitor when last summer it hired as its chief executive officer Jurgen Schreiber, a former CEO of Shoppers, industry watchers said. Mr. Schreiber will continue to be CEO of Rexall after the takeover, the companies said.

Mr. Schreiber has a strong background in boosting sales at Shoppers and before that at A.S. Watson Group, a European chain of health and beauty stores. At Shoppers, he shored up business in high-margin beauty and cosmetics merchandise, which helped offset lower margins of other goods such as toothpaste as well as declining margins in generic drugs. Over the past few years, Rexall has been working at transforming itself into a more distinct and stronger chain as it fought off Shoppers as well as new provincial generic prescription rules that result in pharmacies losing billions of dollars of government funding.

John Hammergren, chairman and CEO of McKesson, said on Wednesday that Canada’s health care landscape is “rapidly evolving. It is marked by a move of primary care into pharmacy and increasingly complex patient demand.”

“With today’s announcement, McKesson will bring together the strengths and expertise of our diverse portfolio to address challenges and opportunities in delivering the very best patient care.”

The acquisition, which will be funded by a mix of cash and debt, is expected to close late in 2016, the companies said.

McKesson expects the acquisition to be “modestly accretive to adjusted earnings per diluted share” for fiscal 2017. It said profit attributable to Rexall Health will be partly offset by an anticipated charge related to the reversal of a step-up to fair value of acquired inventory at the date of the acquisition.

McKesson said it anticipates the takeover will “drive meaningful accretion, on a constant currency basis, to fiscal 2018 adjusted earnings per diluted share.”

The acquisition is subject to approvals under the Investment Canada Act and the Competition Bureau.

The major players

Canada’s big standalone pharmacy chains include:

  • Katz Group operates more than 460 Rexall and Rexall Pharma Plus locations across Canada.
  • McKesson already owns IDA and Guardian pharmacies across Canada.
  • Shoppers Drug Mart, owned by Loblaw, operates more than 1,307 SDM/Pharmaprix stores across Canada.
  • Jean Coutu Group operates 417 stores in Quebec, New Brunswick and Ontario.
  • Pharmasave includes 550 independently owned stores in nine provinces.
  • Uniprix operates 375 pharmacies in Quebec.
  • London Drugs operates 78 stores in Manitoba, Saskatchewan, Alberta and British Columbia.
  • The Lawtons pharmacy network has 79 standalone stores in Atlantic Canada.

RBC worried about cash lent out to energy firms, consumers hit by the oil slump

TORONTO _ Royal Bank (TSX:RY) reported a first-quarter profit that was flat from a year ago, as higher earnings from its wealth management and its main banking division were offset by weaker results from insurance and capital markets.

The bank reported net income of $2.45 billion for the quarter flat compared to a year ago and six per cent lower than the previous quarter, when it had $2.59 billion of profit.

RBC also increased its provisions for credit losses to $410 million an increase of $140 million, or 52 per cent due to higher provisions in the oil and gas sector and in its personal lending and credit card portfolios.

Barclays analyst John Aiken said that while earnings were disappointing, investors may react positively to the bank’s  “increasingly realistic” view on how its energy portfolio will be impacted by lagging crude prices.

RBC’s personal and commercial banking operations reported net income of $1.29 billion, up three per cent from a year ago.

Its wealth management division had net income of $303 million an increase of 32 per cent as the bank benefited from the inclusion of Los Angeles-based City National Bank. The acquisition closed at the end of November.

Meanwhile, RBC’s insurance division saw its net income decrease by 29 per cent to $131 million due to higher claim costs. Its capital markets profits slumped by four per cent to $570 million.



Losses in oil and gas sector bite into Manulife’s fourth quarter earnings

TORONTO _ Manulife Financial Corp. saw a 62 per cent drop in its fourth-quarter profit, which it blamed on losses in its oil and gas investments.

The Toronto-based company reported net income of $246 million or 11 cents a share for the three-month period ended Dec. 31, 2015.

This compared with a profit of $640 million or 33 cents per share for the same period a year earlier. Core earnings amounted to $859 million in the fourth quarter, up 28 per cent from $713 million year over year.

Manulife (TSX:MFC) says a decline in its investments in energy resulted in a $250-million charge for the fourth quarter and a $876 million charge for 2015.

The insurer says volatility in energy prices is a factor that could make it difficult for the company to meet its core profit goal of $4 billion this year.

Manulife president and CEO Donald Guloien says despite the outlook, the company remains confident about the “underlying fundamentals” of its business. It announced that it has raised its dividend by nine per cent to 18.5 cents the third increase in seven quarters.

“This was a disappointing year in terms of net income, largely due to sharp mark-to-market declines in oil and gas prices, diminishing an otherwise great year,” he said in a statement.

The insurer says it saw insurance sales grow by 20 per cent to US$416 million in Asia and increase by 76 per cent to US$303 million in Canada for the fourth quarter year over year. Insurance sales in the U.S. fell 17 per cent to US$127 million in the same period.



Edmonton may be template for legalizing ride sharing in other cities

By Chris Purdy


EDMONTON _ Cab drivers in Edmonton protested for months at city hall, some of them pulling off their shirts, as councillors debated whether to pass a new bylaw legalizing ride-sharing companies such as Uber.

As similar revolts played out across Canada, the Alberta capital sped ahead late last month and became the first jurisdiction to pass regulations for the new industry.

Experts say other cities are bound to follow.

“Congratulations Edmonton. Well done. You’re first off the mark,” says John-Kurt Pliniussen, an associate professor of business at Queen’s University in Kingston, Ont.

By being first to take the leap, Edmonton is showing other cities that it can be done, Pliniussen says.

He expects most jurisdictions will have regulations in place by the end of the year.

“They’re going to say, ‘Well, if Edmonton can do it, we can do it. And so let’s get going.”’

California-based Uber is an app-based business that operates in 40 Canadian communities as well as around the world. It allows people to request rides over their phones and sets them up with drivers who use their personal vehicles. Getting an Uber ride is typically cheaper than taking a taxi.

Cabbies are concerned that Uber drivers have an unfair advantage because they’re not subject to licensing and insurance rules.

Edmonton’s regular taxi drivers argued at testy city council meetings last fall that the service would flood the streets with drivers and make it impossible for them to make a living _ taking their shirts right off their backs.

Under the Edmonton bylaw, which takes effect March 1, “private transportation providers” must carry provincially approved insurance, have an annual vehicle inspection and agree to a criminal record check.

They must charge a minimum of $3.25 per ride, but there is no price cap. Only taxis are permitted to pick up street hails or use taxi stands.

Uber Canada said the regulations are workable and applauded Edmonton for modernizing its transportation laws.

The Alberta Taxi Group said it was disappointed by the bylaw and that it still fails to address safety and consumer protection concerns.

Pliniussen says it’s clear that customers like Uber and it’s here to stay, so cities need to get on board. He adds that Canada is behind the United States, where dozens of jurisdictions have passed regulations.

“There’s no reason why every city every jurisdiction where Uber is there’s no reason why they shouldn’t have had this done already.

“This is not complicated at all.”

But it is contentious.

Uber stopped operating in Calgary in November after the city won a court injunction against the company. City staff are still working on a bylaw, which is to be presented to council Feb. 22.

In Quebec, the taxi industry is also going to court seeking an injunction against Uber and the province’s transport minister has called for a parliamentary commission to study ride sharing.

City officials in Toronto are also working on a bylaw. A report is expected in April. Mayor John Tory has commended Edmonton and says he hopes his city can accomplish the same thing.

Ontario’s insurance regulator has made the move easier by approving coverage for ride-sharing drivers _ the first to do so in Canada. Aviva Canada says it will be working with regulators across the country to make the same insurance available in other provinces. Uber says other insurance companies are also considering coverage.

Mariana Valverde, an expert in municipal law at the University of Toronto, says insurance is a big hurdle in legalizing Uber, although with Edmonton taking the first step with its bylaw, other cities are likely to do the same.

But she fears that Uber, with a monopoly so far on ride sharing in Canada, will drive cabbies out of business. And if taxis disappear, Uber would be free to hike its rates, she suggests.

Valverde recently flagged a cab in Toronto and asked the driver how he felt about Uber. He said he drives both a regular cab and for Uber and doesn’t mind it at all.


Ride-hailing service will be allowed to operate legally starting March 1

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