1. 1. 1. Permanent life insurance
      2. Term-to-65 life insurance
      3. Register his son as a joint tenant on the property
      4. Term-to-100 life insurance

Justin, a person who was single and had never been married, died in September of this year. His assets included a $10,000 Province of Ontario bond that he bought 5 years ago for its face value. The bond had an interest rate of 3%, payable semi-annually in April and October. If average bond yields at the time of Justin’s death were 4%, what must be included in his final tax return?

Ten years ago, Danny purchased a universal life insurance policy with a death benefit of $1 million dollars. The policy has a cash value of $100,000 and a cash surrender value of $50,000. Since his purchase he has received dividends of $8,000 that he has chosen to leave within the policy. The ACB of the policy is $30,000. If Danny decides to surrender the policy, what would be the tax implications?

Robert is a member of a Defined Contribution Pension Plan (DCPP) at work. Each year he contributes 10% of his $100,000 salary to his DCPP and his employer matches 50% of his contribution. Robert also has an RRSP that is worth $100,000 and is currently earning 3%. Robert has always made the maximum deductible RRSP contribution by February for that year. Assuming all these factors continue into the future, what will be the value of his RRSP in 25 years time?

Barry, age 67, is a widower and has two adult children, aged 36 and 33, who are both married. Twenty years ago, Barry purchased an investment property for $100,000 and today it is worth $200,000. He is considering transferring the property into joint tenancy with his two adult children. Which of the following are the biggest risks to consider before electing a transfer the property into joint tenancy?

1.  With the property in joint tenancy when Barry dies, it will not go through his estate and he will not have to pay probate.

2.  Barry will not be able to split the income related to the investment property as attribution rules will apply to him.

3.  He will lose control of the property and his children could make changes or even sell their shares to someone else.

4.  Both Barry’s children are married and if either of their marriages breakdown the investment property may be included in their family assets.

Lenna, a financial planner, is preparing a cash flow statement for her new client Bernie who is a sole proprietor. Which of the following expenses is considered a non-discretionary expense?

Gaston, a financial planner met with his client Frank. Frank is retired and his pension consists of only CPP, OAS and GIS benefits. In reviewing Frank’s client documents, which information might indicate that Frank has had trouble saving money over the years?

Case Study Sample: Investing for Retirement

Michael is reviewing his liquid assets to determine how much can be allocated to his retirement. He still wants to have an emergency fund, but needs help calculating how much money should be set aside. Given his expenses and his desire to have 6 months set aside, how much does Michael need saved in an emergency fund?

Case Study Sample: Investing for Retirement

Based on Michael’s cash flow, he has $33,000 ($2,750/month) in additional funds available to invest in his RRSP (in addition to the $12,000/year that he is already contributing). If his RRSP contribution room per year remains at $18,000 over the next 15 years, how many months will it take him to reduce his unused RRSP contribution room to 0?

Case Study Sample: Investing for Retirement

If Michael is contemplating between investing in mutual funds versus segregated funds, what are some of the critical factors that he should consider? Choose the best options that apply:

1. Maturity guarantee provided by segregated funds is not required given his long investment time horizon.

2. Segregated funds have the advantage of being of lower cost than mutual funds.

3. As a sole proprietor, he is responsible for business related liabilities which makes the creditor protection of segregated funds a good option.

4. Given his comfort with volatility and his growth objective, segregated funds would be better suited for Michael.

Case Study Sample: Investing for Retirement

To reach Michael’s retirement income goal of $40,000/year (in today’s dollars) how much will he need to save by age 60? Inflation is expected to be at 2%. As well, assume he lives to age 95, earns 3.1% return on his retirement assets and he withdraws the money at the end of the year.

Case Study Sample: Investing for Retirement

Although Michael’s RRSP is currently small, he expects it to grow over the next 15 years as he increases his retirement savings contributions. He has been doing some research into Retirement Income Retirement Funds (RRIFs) as he expects this is what he will do with his RRSP funds. With regard to a RRIF, which of the following statements are true that Michael should be aware of?

1. An annuitant can accumulate additional capital by making new regular, tax-deductible contributions.

2. An annuitant can accumulate additional capital through investment earnings.

3. In a low-return environment, withdrawals from a RRIF could erode the capital base of a RRIF.

4. RRIFs typically provide the annuitant with a guaranteed level of income throughout his lifetime.