Here is a situation to consider, a charitable 83-year-old lady wishes to give $500,000 to her favorite charity.
If this lady is healthy, she could set up a T100 contract for $500,000 with the charity as beneficiary. She can assign the contract to the charity and use the premiums as a charitable donation and subsequently get the charitable donation tax credit each year.
Or, she could remain the owner of the contract and her estate could get a charitable donation tax credit on the $500,000 death benefit.
If she wants to take the tax credit on the premiums, say $50,000 per year, she could receive a tax credit of approximately $20,000 annually.
If her estate takes the tax credit on the one-time donation of the death benefit, the tax credit is $200,000.
Using simple math, if she survives past age 93, the premium approach works, if not, the one-time donation of $500,000 works best.
As an aside, look for clients that are already philanthropic. It’s a tough sale when you first have to convince someone to be charitable.
We look forward to your comments.
And, Canada Life is making a special offer on some of its term insurance, four free months! Please contact your QFS business development manager for all the details.
Take Care,
Scott Edgington
Regional Manager, Wealth, Ontario
Qualified Financial Services
Rick Gallant
Regional Manager, Wealth, Atlantic Canada and Quebec
Qualified Financial Services
This communication reflects the views of Qualified Financial Services Inc. as of the date published. The information in this publication is for general information purposes only and is not to be construed as providing individual legal, tax, financial or other professional advice. Qualified Financial Services Inc. assumes no responsibility for any errors or omissions in the information contained herein nor for any reliance placed on such information. Please seek independent professional advice before making any decisions.
