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

RRSP Insured Gifting ****  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

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

Gift Annuity

0Tax Credit

0Donation Receipt

690Net Income

310Tax Payable

1000Income

20,000Investment

5% GIC

5,040

11,537

800

0

800

20,000

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%

Insured Gift Annuity

75,000Net to Charity

2090Net Income

Life Insurance

2090Net Income

910Tax Payable

3000Income

75,000Investment

4% GIC

100,000

2245

3005

5250

360

5610

75,000

Insured 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

Insured Annuity #2

200000200000Net to Kids

15000050000Net Gift

86007540Net Income

69250Life Ins

155257540Net Income

16904960TaxPayable

1721512500Income

250,000250,000Investment

Insured Annuity5% GIC

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