Philanthropic solutions using Insurance & Annuities
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Transcript of 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
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