Case Study 6

Leaving a Charitable Legacy while Mitigating your Taxes

MEET

Bill and Mary, a retired couple aged 66 and 65 respectively, both receive annual Canada Pension Plan (CPP) benefits. Due to their comfortable lifestyle, they found themselves not needing the full amount of their CPP benefits for living expenses. They planned to pay the taxes on these benefits, which were significant at 54% in Ontario, and reinvest the remaining funds. However, they also desired to reduce their tax burden and leave a charitable legacy for their family.

Q

THE PROBLEM

Without a strategic approach, Bill and Mary would continue paying high taxes on their CPP benefits, resulting in a significant tax liability for their estate upon the passing of the second spouse.

R

THE SOLUTION

To address their concerns and optimize their wealth preservation strategy, they were introduced to a CPP-leveraged insurance strategy. By utilizing their CPP benefits, they established a $2 million charitable gift while simultaneously saving their estate $1 million in taxes.

Incorporating this insurance strategy into their estate planning unlocked several significant benefits for Bill and Mary. They were no longer burdened by surrendering a substantial portion of their CPP benefits to the tax department. This allowed their wealth to grow unhindered by excessive taxation, ensuring their financial stability.

The insurance component of the strategy provided an attractive return on their CPP benefits upon their passing. This guaranteed return carried no market risk or interest rate fluctuations, offering peace of mind and financial stability. Importantly, the insurance proceeds would be seamlessly distributed to their chosen charitable organizations, free from taxation, ensuring that their wealth would be preserved for the causes they deeply cared about.

By embracing this comprehensive approach, their legacy will be defined by their generosity, rather than excessive taxes having to be paid.

Are you looking to leave a charitable legacy while mitigating your taxes? Our strategic insurance solutions, like the CPP-leveraged insurance strategy, can help you optimize your wealth preservation plan. Contact us today to learn how we can assist you in achieving your financial goals and making a lasting impact through charitable giving.

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