1. Using life insurance for charitable donation Give more, pay less!

2. Be on the lookout… Do you have clients that: Don’t have debts or financial dependants; or Regularly make charitable cash donations; or Volunteer for one or more organisms; or Care deeply about a charitable cause; or Are older; or Have disposable income. If one or more of these points are applicable, you should think about discussing planned giving.

3. What is planned giving? It’s a process to help the donor make larger charitable gifts while maximizing his benefits and/or minimizing the impact on his estate. Charitable gifts can be made during the lifetime of the donor or upon death as part of the estate plan.

4. Canadians are generous! In 2010, 84% of Canadians over age 15 made a financial donation (same as in 2007). Total of $10.6 billion donated in 2010. Donors who planned their donations in advance and supported the same organizations repeatedly over time give significantly more than those who do not. Source: “Caring Canadians, Involved Canadians: Tables Report 2010”, Statistics Canada

5. Where does the money go? OrganizationsMoneyDonors Religious46%36% Health15%56% Social Services9%39% International6%9% Hospitals6%18% Source: “Caring Canadians, Involved Canadians: Highlights from the 2007 Canada Survey of Giving, Volunteering and Participating”, Statistics Canada

6. It Pays to Give!

7. Federal Tax Credits Every province and territory except Québec First $200 donation:15.00% Donations above $200:29.00% Québec* First $200 donation:12.53% Donations above $200:24.22% * The tax value of the federal credit is the sum of the federal credit less the 16.5% abatement for Québec taxpayers.

8. Provincial and Territorial Tax Credits Federal CreditProvincial / Territorial Credit Up to $200Over $200Up to $200Over $200 Alberta15.00%29.00%11.00%21.00% British Columbia15.00%29.00%5.06%14.70% Manitoba15.00%29.00%10.80%17.40% New Brunswick15.00%29.00%9.68%17.95% Newfounland and Labrador15.00%29.00%7.70%14.30% Northwest Territories15.00%29.00%5.90%14.05% Nova Scotia15.00%29.00%8.79%21.00% Nunavut15.00%29.00%4.00%11.50% Ontario15.00%29.00%5.05%11.16% Prince Edward Island15.00%29.00%9.80%16.70% Qu é bec 12.53%24.22%20.00%24.00% Saskatchewan15.00%29.00%11.00%15.00% Yukon15.00%29.00%6.40%12.80% http://www.ey.com/CA/en/Services/Tax/Tax-Calculators

9. How much can you claim? Donations can be claimed for tax credits in the year they were made or any of the following five years. The maximum amount of donations that can be claimed in a year is 75% of the donor’s net income. The maximum amount of donations that can be claimed in the year of death or the year before is 100% of the donor’s net income.

10. How can you help your client? Life insurance is a great tool for planned giving. A donor gets to give much more than what he or she pays out-of-pocket. Possibility to structure the life insurance policy so that the tax credit is based on the benefit paid upon donor’s passing or on the premiums paid during the lifetime of the donor.

11. Give more, pay less! Example MNS 50 years-old Wants to contribute to his favourite charitable organization. Chooses to give through a life insurance – ParPlus 20- pay (enhanced option guaranteed to age 100) with a $50,000 face amount. Annual premium: $1,300

12. Give more, pay less! ParPlus 20-pay Cumulative Premium $26,000 Charitable Donation: $50,000 And that’s before considering the tax credit associated with the donation!

13. When do you want the tax credit? Option 1 Following death, on the final income tax return. – Benefits the estate who is responsible of paying the income tax on the final return. Option 2 Every year when a premium is paid. – Benefits the taxpayer during his or her lifetime.

14. What can be claimed for tax credit? Option 1 Donor owns the policy, charitable organization is the beneficiary. The life insurance benefit paid to the charity upon the donor’s death can be claimed for a tax credit on the donor’s final income tax return. This strategy helps offset a potential large tax bill upon death following the deemed disposition of the deceased’s assets.

15. Provincial and Territorial Tax Credits Option 1: Tax Credit on $50,000 Donation Federal CreditProvincial / Territorial Credit$50,000 Donation Up to $200Over $200Up to $200Over $200Tax Credit Alberta15.00%29.00%10.00%21.00% $ 24,950.00 British Columbia15.00%29.00%5.06%14.70% $ 21,802.72 Manitoba15.00%29.00%10.80%17.40% $ 23,158.80 New Brunswick15.00%29.00%9.10%14.30% $ 21,611.60 Newfounland and Labrador15.00%29.00%7.70%13.30% $ 21,110.80 Northwest Territories15.00%29.00%5.90%14.05% $ 21,480.70 Nova Scotia15.00%29.00%8.79%21.00% $ 24,947.58 Nunavut15.00%29.00%4.00%11.50% $ 20,207.00 Ontario15.00%29.00%7.88%17.41% $ 23,157.94 Prince Edward Island15.00%29.00%10.78%18.37% $ 23,641.82 Qu é bec 12.53%24.22%20.00%24.00% $ 24,078.62 Saskatchewan15.00%29.00%11.00%15.00% $ 21,964.00 Yukon15.00%29.00%7.39%13.40% $ 21,159.98 The maximum amount of donations that can be claimed in the year of death is 100% of net income.

16. Be careful… Option 1: $50,000 Donation If the amount donated is higher than the deceased taxpayer’s net income for the year of death, the excess donation can be carried back and claimed in the previous year’s income tax return up to 100% of that year’s net income.

17. What can be claimed for tax credit? Option 2 Charitable organization is the owner and the beneficiary. Donor pays the premiums. Donor receives annual tax receipt for premiums paid in the year. Donor can claim a tax credit for premiums paid. No tax credit for death benefit paid to charitable organization.

18. Provincial and Territorial Tax Credits Option 2: Annual Premium $1,300 Annual premium of $1,029 Annual Tax CreditNet Annual CostTotal Net Cost (20 years) Alberta $ 600.00 $ 700.00 $ 14,000.00 British Columbia $ 520.82 $ 779.18 $ 15,583.60 Manitoba $ 562.00 $ 738.00 $ 14,760.00 New Brunswick $ 524.50 $ 775.50 $ 15,510.00 Newfounland and Labrador $ 510.70 $ 789.30 $ 15,786.00 Northwest Territories $ 515.35 $ 784.65 $ 15,693.00 Nova Scotia $ 597.58 $ 702.42 $ 14,048.40 Nunavut $ 483.50 $ 816.50 $ 16,330.00 Ontario $ 556.27 $ 743.73 $ 14,874.60 Prince Edward Island $ 572.63 $ 727.37 $ 14,547.40 Qu é bec $ 595.48 $ 704.52 $ 14,090.40 Saskatchewan $ 536.00 $ 764.00 $ 15,280.00 Yukon $ 511.18 $ 788.82 $ 15,778.40

19. Give more, pay less! ParPlus 20-pay Highest Net Cost: $16,330 Lowest Net Cost: $14,000 Charitable Donation: $50,000

20. Possible Strategy for Tax Credits Instead of claiming your charitable donations annually, consider claiming all donations made over the last 5 years to maximize your tax credit for amounts over $200. To maximise the charitable tax credit, a taxpayer can claim receipts made out in either his name and his spouse’s name.

21. Transfer of an Existing Policy It is possible for a donor to transfer ownership of an existing life insurance policy. Charitable organization becomes the new owner and beneficiary; donor continues to pay premiums. Charitable donation receipt in the amount of the cash surrender value at time of transfer will be given to donor. Premiums paid by donor following the transfer will also be considered as a charitable donation. If there’s a policy gain resulting from the policy ownership transfer, that amount is taxable to the transferor.

22. Life Insurance Products Any permanent life insurance product can be used as a charitable gift: For couples, the joint last-to-die option, when available, will cost less. Go to Assumption Life’s Producer’s Corner for more information on our product line-up! producerscorner.ca or www.assumption.ca

23. Benefits for Charitable Organization Additional revenue to pursue their work or specific projects. Facilitates long term planning. Larger sums than just cash donations.

24. Benefits for Donor Substantial contribution for relatively low cost. Significant tax credits. With a new life insurance policy, no impact on estate. Donation is incontestable. Donor is free to choose the charitable organization. Part of their legacy.

25. Ask Your Clients When you discuss estate planning with your clients, ask them about the charities that are important to them. Offer your help with planned giving. Show them how life insurance gives them the opportunity to give more without changing their budget.

26. Using life insurance for charitable donation Give more, pay less!