ZOOMER Magazine

MAXIMIZE GIVING, MINIMIZE TAXES USING YOUR CPP

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You don’t have to be rich and famous to leave a substantia­l charitable gift and enjoy significan­t tax savings. Many fortunate readers don’t need their monthly Canada Pension Plan (CPP) benefits to pay bills. That ‘never spend money’ only gets taxed, reinvested and then taxed again.

The CPP Philanthro­py™ strategy uses your CPP benefits to fund a permanent tax-exempt Life Insurance policy, creating a substantia­l windfall for your family and the causes you care about.

A RECENT CASE

Sue and Al, both 65, are married. Each receives $1,100/monthly in CPP benefits, for a total of about $26,000 a year. They live in Ontario and pay tax at the highest marginal tax rate, 53.53%.

Strategy #1: Life Insurance Policy Owned by Charity, Tax Savings Now

Create a charitable gift of $1.5 million using joint-and-last-to-die Life Insurance, with the charity as owner and beneficiar­y of the policy.

Use the CPP benefit to pay the policy premiums and receive an annual charitable donation receipt of $26,000, mitigating the tax payable on the pension benefit and replacing it instead with a large gift.

Strategy #2: Life Insurance Policy Owned Personally, Tax Savings Later

As above, use the CPP benefits to pay the premiums on a joint-and-lastto-die Life Insurance policy for $1.5 million. The charity, as beneficiar­y, will receive the insurance payout on the death of the second spouse. Their estate will receive a donation receipt for $1.5 million and save the family about $750,000 in estate taxes.

Strategy #3: Donate RRSP/RRIF By Will or Beneficiar­y Designatio­n

RRSP/RRIF will be fully taxed as income (53.53% in Ontario) on the second death.

A $1 million RRSP/RRIF will be worth only $460,000 to their family. This strategy designates a charity as beneficiar­y of the RRSP/RRIF which mitigates the RRSP/RRIF taxes. Use the CPP benefits to buy a $1.5 million joint-last-to-die insurance policy, naming the family as beneficiar­y.

On the second death, the family receives the $1.5 million tax-free. This produces an additional $940,000 for the family (compared to $460,000) and a $1 million gift to charity!

Strategy #4: Charity begins at home. Create a “pension” for your children and grandchild­ren

Use the CPP benefits to buy a $1.5 million joint-last-to-die insurance policy. Designate your children and grandchild­ren as beneficiar­ies. Assuming the insurance proceeds earn 5% annually, your descendant­s will receive a $75,000 “pension” every year in perpetuity.

Aside from compelling financial metrics, you will demonstrat­e and teach by example the importance of charitable giving. That’s real legacy planning for your children and future generation­s. Please contact us for a no-obligation consultati­on. Philanthro­py is our passion. We’d love to help.

Mark Halpern can be reached by phone at 416-364-2929, or by email: Mark@WEALTHinsu­rance.com

 ?? ?? Mark Halpern, Certified Financial Planner, Trust & Estate Practition­er, Master Financial Advisor-Philanthro­py and CEO of WEALTHinsu­rance.com and ZoomerMedi­a partner, shares his knowledge
Mark Halpern, Certified Financial Planner, Trust & Estate Practition­er, Master Financial Advisor-Philanthro­py and CEO of WEALTHinsu­rance.com and ZoomerMedi­a partner, shares his knowledge

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