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Guiding Principles (PowerPoint)


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									Estate & Charitable Planning
“Planning for your family, planning for
your practice”

                    Monique Trépanier, B.A. (Hon.), LL.B.
                    Senior Will & Estate Planner

                    Lauren Storer, B.Sc. PFP
                    Senior Account Manager,
                    Foundation Services,

                    October 15, 2010                        1
The importance of integrated planning

              Probate and Income Your   Enduring Power
                 Tax Planning    Will     of Attorney

   - Inter Vivos Trust                                        RSP
     - Estate Freeze                                       Designations

    -Alter Ego Trust
 - Joint Partner Trust                                   Life Insurance

        Change In Family                         Jointly Held
         Circumstances                            Property
                                 Law Legislation
An Effective Estate Plan Should:

•   Maximize wealth for you and your heirs
•   Minimize the impact of liabilities – especially taxes
•   Reduce the burden on your family
•   Include a plan for the unexpected
•   Provide peace of mind

Plan Your Legacy

• Do you have a Will? What happens if you do not?
• Do you have an Enduring Power of Attorney in place?
• What taxes are payable on death?
   – Provincial probate fees in most provinces on all assets
     in estate – in B.C. these amount to approx. 1.4%
   – Capital gains taxes payable on assets such as stocks
     and real estate. They are taxed at 50% inclusion rate.
     CRA deems disposition of all assets at fair market
     value on death
       • Can rollover to spouse
       • Exemptions: principal residence; private company
         shares may be eligible for small biz capital gains
         exemption                                           4
Changes To Your Will

• You should review your Will every 3 - 5 years or
  when there is a significant life event
• Wills ARE automatically revoked by marriage
• Wills are NOT cancelled automatically when...
   – you are separated from a spouse
   – your Will is old and out of date
   – the Will no longer meets your wishes
• A divorce will cancel those portions of your Will which
  make the former spouse a beneficiary or name the
  former spouse the executor

Your Intended Beneficiaries

Who, how much to give and when
  – Identify beneficiary issues, such as special needs,
    minors, spendthrifts, unstable marriages, or
    country of domicile, etc.

Choosing the Right Executor

•   Consider who to appoint as executor and as a back-
    up executor to your Will– can be individual(s) or a
    corporate executor such as Scotiatrust
•   Considerations:
     –   Expertise
     –   Availability
     –   Willingness
     –   Trustworthiness
     –   Good Judgment
     –   Impartiality
     –   Longevity

Passing On Your Bounty

There are a number of methods of transferring
1.   Outright gifts during life
2.   Joint tenancy
3.   Inter Vivos Trusts
4.   Wills - Testamentary Trusts
5.   Beneficiaries Designations, ie: life insurance
     and RRSP/RRIFs

Testamentary Trusts - Benefits

•   Trust is taxed as a separate taxpayer
•   Trust is taxed at personal graduated rates
•   Provides income splitting benefits
•   Provides asset protection
•   Control and flexibility

Other Planning Considerations

• The guardian for your minor children in the case of
  the other parent predeceasing or dying with you
• The types of assets held by your estate and related
  tax and succession planning considerations
• Charitable giving opportunities

Unique planning considerations

•   Do you require/have a succession plan?
•   Do you know your options?
•   Structure of your practice
•   Confidentiality of patient records
•   Security of controlled drugs / prescription pads
•   Patient claims against your estate

    Useful information can be found on your College /
    Association Websites

Charitable Planning

Characteristics of a Planned Gift

1. Usually made from assets rather than income,
   hence tend to be large
2. Made in consultation with legal and financial
   advisors and with reference to overall estate plan
3. May be outright or deferred or a combination of the
4. Balances personal and family needs with
   philanthropic wishes
5. Tax effective

  Value Based Planning

                                        Social Legacy:
                                        Charity or Taxes?
Total Estate
                   Family Legacy
Hierarchy of             (Heirs)

                    Personal Needs
                         1st Priority

Tax & Philanthropy

1.   Gifts of public securities   ]   which
2.   Bequests                     ]   assets
3.   Gifts of RRSPs/RRIFs         ]   to
4.   Gifts of life insurance      ]   give

1. Outright Gift to Charity       ]   how
2. Private Foundations            ]   best
3. Donor Advised Funds            ]   to give

Gifts of Public Securities

• security must be given in specie (i.e. transferred to
  charity by broker in its original form, not cash). No
  capital gains tax on the asset if transferred to the
  charity “in kind”
• Donor also receives tax credit: up to 43.7% in BC

• best to transfer electronically to prevent delays
  between the transfer of the securities and
  determining the fair market value of the securities for
  tax receipting purposes

Significant Tax Savings

                         Sell Security & Donate   Donate Security
Value of                         $100,000            $100,000
Cost of security                  $50,000             $50,000

Taxable capital gain @            $25,000               $0
Tax on gain @ 43.7%               $10,925               $0

Tax credit @ 43.7%                $43,700             $43,700

Net tax savings                   $32,775             $54,625


• Gifts by Will to persons or charities
• Easy to make – just requires Will or codicil to Will
• Revocable – enable donors to change their minds
  and alter terms of bequests as circumstances change
• Contingent or Disaster Clause Bequest, Specific
  Bequest or Residual Bequest

Bequests – tax implications

• Bequests generate similar tax savings to lifetime gifts
• Estate receives tax receipt from charity
• Receipt triggers tax credit on final two lifetime tax
• Is possible to eliminate all taxes in the final two
  lifetime returns by giving at death
• Splitting a large bequest into a lifetime gift and a
  bequest can help significantly increase total tax

Donation of RRSP/RRIF

  – Charity named on plan documents
  – Direct payment to charity on death of second
  – Qualifies as a gift by will for tax purposes
  – Does not incur probate fees
  – Preserves privacy for family
  – Most highly taxes asset in estates; gift enables
    effective tax planning with less effect on family

Donation of Life Insurance Policy

• Life insurance can be donated to charity
• Modest current premium payments can provide large
  gift at death
• Possible to receive tax receipt for every annual
  premium payment if charity owns the policy
• If ownership of the policy is retained by the donor, the
  tax receipt is issued at death for the face value of the

Case Study

Case Study

•   Mr. Andrew Davis (55) and Dr. Margaret Davis (53)
•   3 children: Jennifer (24); Zack (22); Lynsey(16)
•   Andrew is an Architect working for a small firm in Vancouver
•   Margaret is a family medicine physician with a thriving private
•   Jennifer has 1 year old child, and lives in Edmonton Alberta where
    she is a teacher.
•   Zack has just begun his medical degree at the University of
•   Lynsey is still in high school, no clear plans for future
•   Andrew & Margaret own a home in Vancouver and are considering
    purchasing a piece of property in the US.
•   Other assets include: RRSP, joint investment account (public
    securities), joint last-to-die insurance;
•   Approximate value of estate: $2.1million
•   Andrew and Margaret are considering philanthropy in a more
    targeted way and would like to finalize an estate plan
•   Margaret would like to support the medical students at UBC by
    funding bursaries for students in financial need / Andrew would
    like to support organizations dedicated to land conservation in BC

Monique Trépanier, B.A., LL.B               Lauren Storer, B.Sc., PFP
Senior Will & Estate Planner                Senior Account Manager,
Scotia Private Client Group                 Foundation Services
510 - 650 West Georgia Street               Scotia Private Client Group
Vancouver, B.C.                             510 - 650 West Georgia Street
V6B 4N7                                     Vancouver, B.C. V6B 4N7
604 718 7144 (t)                            604 718 7119 (t)
604 718 7151 (f)                            604 718 7152 (f)
monique.trepanier@scotiaprivateclient.com   lauren.storer@scotiaprivateclient.com


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