A strategy for financial accumulation and intergeneration wealth transfer'

1
A strategy for financial accumulation and
inter-generation wealth transfer.
2
Client Profile
The insured asset transfer is designed for those
who have

• achieved a degree of financial success
• annual tax obligations from personal assets (or
  investments)
• a desire to reduce taxes on income and assets
• preserve estate for heirs.

3
Accumulate Growth
The insured asset transfer

• allows you to retain control of your capital in a
  tax-advantaged insurance program and
• can yield a higher transfer amount than
  traditional taxable investments (fixed Income).

4
Your net-worth cycle
5
Consider this

• Some of your net worth will not be used in your
  lifetime.
• Does it make sense to pay income tax on the
  growth each year?
• It may be more beneficial to preserve what youve
  accumulated than to try to increase your net
  worth by other means.

6
Rene Sandra Levesque
25 - year outlook using the fixed income portion
of your investments

• Rene age 76, Sandra age 73
• 15,000 in fixed income investments yielding five
  per cent before tax with a 39 marginal tax rate.

7
Traditional taxable fixed income investments
Traditional after Tax _at_ 5 Rene Sandra 510,579
8
Heres why
25 - year comparison

• yearly taxes paid on growth of capital could
  reduce the value by half.
• Compare fixed income investment to insured asset
  transfer over 25 years.

9
Comparison
Proceeds from insured asset transfer vs. fixed
income investment

• Rene age 76, Sandra age 73
• 15,000 used to fund a permanent life insurance
  program with insurance proceeds (total death
  benefit) payable on death.

10
Insured Asset Transfer
Tax-advantaged accumulation
With tax-advantaged accumulationRene
Sandra 706,008
11
Insured Asset Transfer
Increase value of capital

• a permanent life insurance policy can
  substantially increase the value of the capital
  that is ultimately transferred to your
  beneficiaries.
• Estate value 1,340,231.

12
Insured Asset Transfer
Tax-advantaged accumulation

• Unlike other investments that result in taxable
  growth, life insurance provides tax-advantaged
  accumulation that passes tax-free to your named
  beneficiaries upon death.

13
Insured Asset Transfer
A source of income

• Permanent insurance can also become a source of
  income to you in your lifetime.
• These polices have cash values that may
  accumulate on a tax-advantaged basis.
• Cash value may be used for retirement purposes or
  liquid savings.

14
Disclaimer
An exempt life insurance policy is defined in
regulations 306 and 307 of the Income Tax Act
(ITA). The ITA provides that the cash value
accumulation is exempt from annual accrual
taxation, provided certain conditions, as set out
in the regulations, are met. These regulations
specify a maximum premium, which is the largest
amount permitted each year. For income tax
purposes, the interest earned on the amount above
the maximum premium will be reported to the
policy owner at the end of each calendar
year.All comments related to taxation are
general in nature and are based on current
Canadian tax legislation for Canadian residents,
which is subject to change. For individual
circumstances, consult with a tax professional.
This information is current as of April 2002.