Estate & Charitable Planning

1. Estate & Charitable Planning “Planningfor your family, planning for your practice” Monique Trépanier, B.A. (Hon.), LL.B. Senior Will & Estate Planner Lauren Storer, B.Sc. PFP Senior Account Manager, Foundation Services, October 15, 2010

2. The importance of integrated planning Your Will Probate and Income Tax Planning Enduring Power of Attorney Other: - Inter Vivos Trust - Estate Freeze RSP Designations • Alter Ego Trust • Joint Partner Trust Life Insurance Designations Change In Family Circumstances Jointly Held Property Family Law Legislation Dependant’s Relief Legislation

3. An Effective Estate Plan Should: • Maximize wealth for you and your heirs • Minimize the impact of liabilities – especially taxes • Reduce the burden on your family • Include a plan for the unexpected • Provide peace of mind

4. Plan Your Legacy • Do you have a Will? What happens if you do not? • Do you have an Enduring Power of Attorney in place? • What taxes are payable on death? • Provincial probate fees in most provinces on all assets in estate – in B.C. these amount to approx. 1.4% • Capital gains taxes payable on assets such as stocks and real estate. They are taxed at 50% inclusion rate. CRA deems disposition of all assets at fair market value on death • Can rollover to spouse • Exemptions: principal residence; private company shares may be eligible for small biz capital gains exemption

5. Changes To Your Will • You should review your Will every 3 - 5 years or when there is a significant life event • Wills ARE automatically revoked by marriage • Wills are NOT cancelled automatically when... • you are separated from a spouse • your Will is old and out of date • the Will no longer meets your wishes • A divorce will cancel those portions of your Will which make the former spouse a beneficiary or name the former spouse the executor

6. Your Intended Beneficiaries Who, how much to give and when • Identify beneficiary issues, such as special needs, minors, spendthrifts, unstable marriages, or country of domicile, etc.

7. Choosing the Right Executor • Consider who to appoint as executor and as a back-up executor to your Will– can be individual(s) or a corporate executor such as Scotiatrust • Considerations: • Expertise • Availability • Willingness • Trustworthiness • Good Judgment • Impartiality • Longevity

8. Passing On Your Bounty There are a number of methods of transferring property: • Outright gifts during life • Joint tenancy • Inter Vivos Trusts • Wills - Testamentary Trusts • Beneficiaries Designations, ie: life insurance and RRSP/RRIFs

9. Testamentary Trusts - Benefits • Trust is taxed as a separate taxpayer • Trust is taxed at personal graduated rates • Provides income splitting benefits • Provides asset protection • Control and flexibility

10. Other Planning Considerations • The guardian for your minor children in the case of the other parent predeceasing or dying with you • The types of assets held by your estate and related tax and succession planning considerations • Charitable giving opportunities

11. Unique planning considerations • Do you require/have a succession plan? • Do you know your options? • Structure of your practice • Confidentiality of patient records • Security of controlled drugs / prescription pads • Patient claims against your estate Useful information can be found on your College / Association Websites

12. Charitable Planning Opportunities

13. Characteristics of a Planned Gift • Usually made from assets rather than income, hence tend to be large • Made in consultation with legal and financial advisors and with reference to overall estate plan • May be outright or deferred or a combination of the two • Balances personal and family needs with philanthropic wishes • Tax effective

14. Value Based Planning Social Legacy: Charity or Taxes? Social Capital Total Estate Hierarchy of Priorities Family Legacy (Heirs) Personal Needs 1st Priority

15. Tax & Philanthropy • Gifts of public securities ] which • Bequests ] assets • Gifts of RRSPs/RRIFs ] to • Gifts of life insurance ] give • Outright Gift to Charity ] how • Private Foundations ] best • Donor Advised Funds] to give

16. Gifts of Public Securities • security must be given in specie (i.e. transferred to charity by broker in its original form, not cash). No capital gains tax on the asset if transferred to the charity “in kind” • Donor also receives tax credit: up to 43.7% in BC • best to transfer electronically to prevent delays between the transfer of the securities and determining the fair market value of the securities for tax receipting purposes

17. Significant Tax Savings

18. Bequests • Gifts by Will to persons or charities • Easy to make – just requires Will or codicil to Will • Revocable – enable donors to change their minds and alter terms of bequests as circumstances change • Contingent or Disaster Clause Bequest, Specific Bequest or Residual Bequest

19. Bequests – tax implications • Bequests generate similar tax savings to lifetime gifts • Estate receives tax receipt from charity • Receipt triggers tax credit on final two lifetime tax returns • Is possible to eliminate all taxes in the final two lifetime returns by giving at death • Splitting a large bequest into a lifetime gift and a bequest can help significantly increase total tax savings

20. Donation of RRSP/RRIF • Charity named on plan documents • Direct payment to charity on death of second spouse • Qualifies as a gift by will for tax purposes • Does not incur probate fees • Preserves privacy for family • Most highly taxes asset in estates; gift enables effective tax planning with less effect on family

21. Donation of Life Insurance Policy • Life insurance can be donated to charity • Modest current premium payments can provide large gift at death • Possible to receive tax receipt for every annual premium payment if charity owns the policy • If ownership of the policy is retained by the donor, the tax receipt is issued at death for the face value of the policy

22. Case Study

23. Case Study • Mr. Andrew Davis (55) and Dr. Margaret Davis (53) • 3 children: Jennifer (24); Zack (22); Lynsey(16) • Andrew is an Architect working for a small firm in Vancouver • Margaret is a family medicine physician with a thriving private practice • Jennifer has 1 year old child, and lives in Edmonton Alberta where she is a teacher. • Zack has just begun his medical degree at the University of California • Lynsey is still in high school, no clear plans for future • Andrew & Margaret own a home in Vancouver and are considering purchasing a piece of property in the US. • Other assets include: RRSP, joint investment account (public securities), joint last-to-die insurance; • Approximate value of estate: $2.1million • Andrew and Margaret are considering philanthropy in a more targeted way and would like to finalize an estate plan • Margaret would like to support the medical students at UBC by funding bursaries for students in financial need / Andrew would like to support organizations dedicated to land conservation in BC

24. Questions? Monique Trépanier, B.A., LL.B Senior Will & Estate Planner Scotia Private Client Group 510 - 650 West Georgia Street Vancouver, B.C. V6B 4N7 604 718 7144 (t) 604 718 7151 (f) monique.trepanier@scotiaprivateclient.com Lauren Storer, B.Sc., PFP Senior Account Manager, Foundation Services Scotia Private Client Group 510 - 650 West Georgia Street Vancouver, B.C. V6B 4N7 604 718 7119 (t) 604 718 7152 (f) lauren.storer@scotiaprivateclient.com