Advisor Opportunities Using Trusts

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• Advisor Opportunities Using Trusts
• Sandy Cardy
• Mackenzie Financial Corporation

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Strategic use of trusts
)

• Initiate tax and estate planning discussions
• Customize basic strategies
• RESULT
• Increased satisfaction with your value
• Opportunities for business building

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Topics to cover today

• Why trusts?
• Basics of taxation
• Case studies
• Asset protection
• Handicapped beneficiaries
• Business Succession
• Income-splitting testamentary trusts
• Insurance Trusts

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Trusts Who is a prospect?

• Minor children
• Special-needs dependents
• Family members who are not financially astute
• Income-splitting
• Retirement planning

• Charitable giving
• Inheritances
• Marriage
• Divorce
• Confidentiality
• Probate
• Family law property claims

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Trusts
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Case Studies
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Trusts - inheritance planning- The Evans family
Robert (85) Emma Evans Johns Parents
Sam (22) Son
John (56)
Heather (20) Daughter
Kate (55)
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Case 1-Testamentary trusts

• Delay distribution of assets
• Control over assets
• Save on income tax

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Johns inheritance of 1,000,000
Direct Inheritance_at_ MTR of 45
Mackenzie Sentinel Corporate Bond Fund 1,000,000
6 interest income 60,000
Taxes payable 27,000
Income retained 33,000
Net annual savings through a testamentary trust Net annual savings through a testamentary trust

Testamentary Trust_at_ graduated rates
1,000,000
60,000
16,000
44,000
11,000

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Johns inheritance
60,000 Income24,000 paid to beneficiaries
36,000
Total Taxes 8,000
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The Power of Testamentary Trusts
Joans 1,000,000 inheritance from his parents is
generating 60,000 interest income annually.
Direct Testamentary Trust (Joan as beneficiary) Testamentary Trust (including spouse and children as beneficiaries)
Taxes payable 27,000 16,000 8,000
Net annual savings N/A 11,000 19,000
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Testamentary trusts - planning opportunities

• Income splitting for high income beneficiaries
• Income sprinkling for beneficiaries with
  dependant children
• Designated income

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Case 2 Insurance trust

• Vivian (68)
• Widowed but well off
• 4 children
• 3 successfully independent
• 1 dependent on Vivian at age 36

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Vivian dies?

• Issue
• Unequal sharing
• Legal wrangling
• Family discord

• Possible solution
• Will planning
• Gifting
• Alter Ego trust
• Insurance trust

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Insurance trusts

• Funded with the proceeds of life insurance policy
• Established outside estate as separate trust
• Beneficiary designation pays proceeds of policy
  to individual - receives proceeds as trustee
• Documentation to establish an insurance trust
• Last Will and Testament
• Trust Declaration or Trust Agreement

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Insurance trusts advantages

• Taxed as testamentary trust
• Probate avoidance
• Creditor proof
• Confidentiality

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Case 3 - Handicapped beneficiaries

• Amanda, age 6
• Father
• Life insurance proceeds 250,000
• Designated beneficiary
• Options available
• In trust for account
• Annuity
• Formal trust

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Henson trust

• Fully discretionary
• Control of assets
• Prescribed
• beneficiary election

Trustee
250,000
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Case 4 - Jackson Tool Die

• Age 56
• Wife Joan (55)
• Children
• Eric (27)
• Cody (22)
• Joanne (17)

Bill Jackson Owner/Manager
5 million
Jackson Tool Die
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Estate freeze - trust
Bill
Family
Trust
Common shares
Debt and preferred
Operating Company
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Estate freeze - strategies to consider

• Use the capital gains exemption now
• Recommend multiple wills

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Estate Freeze - The real nitty gritty

• When to freeze will owner have enough value to
  live on in the future?
• How do you protect childrens shares from
  matrimonial claims?

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Case 5 Asset protection

• Lou (70)
• Divorced married Anna Nicole 2 years ago
• 3 children
• 2 grandchildren
• Anna Nicole (32)
• Divorced
• 1 son

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Lou dies first?

• Issue
• Family law issues
• Estate depletion
• Lous children disinherited
• Legal wrangling
• Family discord

• Possible solution
• Will planning
• Gifting
• Alter-ego trust
• Spousal trust

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Alter Ego trust
Lou and/or Anna Nicole
Assets

• Protection of assets
• Control of capital
• Confidentiality
• Jurisdiction shopping
• Probate avoidance

Lou and/or Anna Nicole
Children
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Mackenzie is here to help

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• Tax and Estate Planning
• Mackenzie University