Clients may be tempted to pay for services such as eldercare or a new deck for the cottage with cash. It may be cheaper in the short run, but the unseen costs — from unreliable workers with no redress to million-dollar liability for accidents on the job — can be high. You may want to alert your boomer clients that undocumented cash transactions can have a negative effect on their retirement savings.

Although your clients may be sorely tempted to do these deals in order to avoid federal taxes, such deals can have serious legal and financial implications. Boomer clients will probably be receptive to advice from their advisors when they realize how a bad call on a cash transaction could potentially cost them thousands or even millions of dollars.

Here are two areas in which under-the-table deals can be too good to be true.

> Construction. Now that spring is here, your clients may be planning home renovations. Or they may want to build their retirement dream home.

Illegal building is an escalating problem, says Greg Gee, president and CEO of Toronto-based Tarion Warranty Corp. , the regulator of new-home builders in Ontario. “And it’s a myth that it’s all in out-of-the-way places,” he adds. “It’s taking place in big cities.”

Part of the fault lies with the consumer. “I can’t believe the number of deals that are done on a handshake,“ Gee says. “People may put more effort into buying a suit, and a home is one of the biggest purchases most people make.”

Clients who are considering building or buying a new home or cottage should contact the new-home warranty provider in their province and ask if the builder is registered.

“Visit ‘Find a builder’ on our Web site ( to see if the builder is registered and review his track record,” says Gee. “A builder not registered with us is an illegal builder.”

Registered builders have met a number of requirements, including proving they know the provincial building code, have experience and sufficient capital.

Your client may assume the cash-only contractor is taking all the risks. After all, he’s the one not declaring his cash income for tax purposes. Not so.

A “special cash price” means no written contract outlining all aspects of the work to be done. That could include crucial issues such as the materials to be used, the work schedule, what your clients will be charged and when payment is to be made.

It means no guarantee that the contractor will obtain the required permits and inspections, provide business liability insurance in case the home is damaged or mandatory coverage from a new-home warranty provider.

Without a written contractual guarantee that the contrac-tor will provide workers’ compensation for all workers, your client will be liable for accidents on the premises, with potentially ruinous consequences.

And without a written contract, your client will have difficulty taking action against a builder who fails to complete the job or whose work is badly done.

Due diligence should also be done when hiring a builder to make additions or renovations to existing homes.

Find out the builder’s history, advises Michael Collins-Williams, director of policy with the Ontario Home Builders’ Association in Toronto.

“Ask for the addresses of references and bang on their doors,” he says. “Ask if they liked the work, if it was completed on time and if it went overbudget. Get a few price quotes and don’t necessarily pick the cheapest. The quote that’s way lower than the others may mean the builder will be cutting corners with materials or have a lower skill set.”

For renovations, Collins-Williams suggests residents of Alberta, Manitoba and Ontario look for a renovator at RenoMark (, a consumer help organization operated by the regional builders’ associations.

RenoMark members are required to be members in good standing with their regional builders’ associations, and will provide clients with detailed written contracts, a minimum two-year warranty on work, and applicable licences and permits.

They also carry a minimum of $2 million in liability insurance, and have workplace safety coverage in place and/or work only with subcontractors that do.

> Eldercare. Some of your clients may be considering hiring live-in or part-time caregivers so their elderly parents can continue living in their homes.

They’d be smart to avoid hiring unqualified caregivers, some of whom expect under-the-table payment.

@page_break@Jill O’Donnell, executive director of Complete Geriatric Care, a Toronto eldercare consultancy, and co-author with John Page and Graham McWaters of The Canadian Retirement Guide (Insomniac Press, $21.95), says there’s a large network of underground caregivers, some of them illegal immigrants, in larger Canadian cities, and your clients should be wary of tapping into it.

“These are the people you may get by placing or answering newspaper advertisements,” she adds. “If they’re from outside the country, it may be impossible to check qualifications or references. Your clients won’t know who they’re getting.”

Maureen Osis, president of ElderWise, a Calgary consultancy on aging issues, says competent help is not just an ad away.

“It’s one thing for someone with English as a second language to care for a six-month-old baby, and an entirely other thing for this person to care for Mom who’s in the initial stages of dementia and has to be motivated to eat,” says Osis. “And does Mom need help sorting out her medication? Will the caregiver be able to help her on the toilet or in the shower?”

“Dealing with people with dementia takes patience, caring and love,” O’Donnell adds. “Being asked the same question over and over again can bring out the worst in a caregiver.”

Clients who rush into a cash-only arrangement may have no recourse if the caregiver disappears with valuables.

“If your client has been named the parent’s power of attorney, if the parent is injured while the caregiver is on duty, your client may be liable,” Osis notes.

And if the caregiver can’t come to work or quits without notice, she adds, your client will have to step in.

“Some people seem to think university or college students are the answer, that they can help Mom or Dad in exchange for room and board,” Osis says. “But there aren’t many 20-year-olds who have the time or the inclination to care for an old person.”

She recommends going through an agency that provides bonded and insured workers. They’re listed under “senior citizens’ services” in the Yellow Pages, and seniors’ centres may be able to suggest agencies in the area. “Going through an agency will cost more,” Osis says, “perhaps $20 dollars or more an hour. But it will screen applicants and provide an immediate replacement if needed.”

She advises asking an eldercare agency if it is registered as a business and, if so, how long it has been in business. She also suggests asking if the agency is a member of the Canadian Home Care Association, which ensures that its members meet certain skill and experience standards.

And your client should ask for — and check — references. IE