Philanthropic solutions using Insurance & Annuities

Philanthropic solutions using Insurance & Annuities Produced in part by- Brenda McEachren Presented by: B.Comm,LLB, TEP Diana Frizell CFP Frizell & Co.

Trends • older demographic gives more • inheritances create ability • insurance funded gifting • tax efficient gifting • larger gifts with impact • accountability, stewardship

Tax Incentives • lower tax rates on gifts of shares • easier to gift RRSP and insurance • 5 yr carry forward • increased deduction limits • 75% of annual taxable income • 100% deduction in year of death

Who is Giving? • entrepreneur • retired • large RRSP/RRIF • large capital gains • extra assets or income • community volunteer

What to give? • Cash • Real estate • Collections - artwork, coins, antiques • life insurance, RRSP, RRIF • securities, investment portfolio • private company shares

When to Give - Now or Later? • Maximize benefit to donor • maximize benefit to charity • match gift with tax liability

Why Gift Now? • tax receipt gets fully utilized • reduces estate tax and probate fees • not vulnerable to WVA challenge • simplifies estate - no appraisals, auctions, disputes, delays • charity puts money to use right away • enables donor participation and recognition

How to Give • personally • corporately • annually • at death

Opportunities • Stocks and Mutual Funds • Gift Annuities • RRSP Gift Planning • Gifts using Life Insurance • Corporate Gifting • Private Company Shares

RRSP Insured Gifting • Mr. & Mrs. B aged 78 & 77 • RRIF $134,000 • Portfolio $850,000, gain $300,000 • tax due on death $130,000 • insure the tax bill or • eliminate the tax bill

Do Nothing Add Insurance Add Gift Add Gift+Ins RRIF $134000 $134000 $134000 $134000 Portfolio $850000 $850000 $850000 $850000 Insurance $130000 $200000 $250000 Total Assets $984,000 $1,114,000 $1,184,000 $1,234,000 Net to CCRA $130,000 $130,000 $69,000 NIL Net to Kids $854,000 $984,000 $981,000 $984,000 Net to Charity NIL NIL $134,000 $250,000 Annual Cost $4242 $6487 $8015 Cost of Gift $2245 $3773 RRSP Insured Gifting ****

Gift Annuity • 78 yr old widow • $42,000 annual income • $170,000 GIC’s • Condo $250,000 • Wants to make gift but needs to preserve cash flow

5% GIC Annuity Investment 20,000 20,000 Income 1000 800 Tax Payable 310 0 Net Income 690 800 Donation Receipt 0 11,537 Tax Credit 0 5,040 Gift Annuity

Insured Gift Annuity **** • 69 yr old female n/s • Annual income = $45,000 • Home $400,000 & GIC’s $300,000 • Intends $75,000 gift to charity in will • Desires 4% return on her portfolio • Tax bracket ~ 31%

4% GIC Insured Annuity Investment 75,000 75,000 Income 3000 5610 Tax Payable 910 360 Net Income 2090 5250 Life Insurance 3005 Net Income 2090 2245 Net to Charity 75,000 100,000 Insured Gift Annuity

Insured Annuity #2 • Mr & Mrs R, both 70 years • $450,000 RRIF and $700,000 GIC’s • Annual taxable income $80,000 • Intend $50,000 gift to charity in will • Desire 6% return on portfolio • Top tax rate • 4 children will inherit balance of estate

5% GIC Insured Annuity Investment 250,000 250,000 Income 12500 17215 TaxPayable 4960 1690 Net Income 7540 15525 Life Ins 0 6925 Net Income 7540 8600 Net Gift 50000 150000 Net to Kids 200000 200000 Insured Annuity #2

Apply the tax refund **** • Donors giving annually are your main focus • Doesn’t matter how much they give • Apply the refund resulting from the gift to an insurance premium • Leveraging the dollars today for a larger legacy tomorrow

Leveraging your gift • $3600 annual gift produces a refund of $1530 • Male 48 uses the $1530 to fund a life insurance policy for 15 years that pays $80,000 at his death to the charity • Female age 60 using that same $1530 could leave $60,000 at death. • In addition, they could benefit from a tax receipt on the premiums they pay during their lifetime, or for their estate when the insurance is paid out

Summary • Identify prospect • Identify assets • Show them how • Work with a qualified Advisor

Philanthropic solutions using Insurance & Annuities