1. Shilpa aged 42 plans on retiring at age 60 and would like to receive Canada Pensions Plan (CPP) and Old Age Security (OAS) benefits as soon as she is eligible.  She has a goal of retiring on 70% of her current pre-tax income. 

 Assumptions: 

• January 2022 Start of Plan year
• Income of $148,000 (43% marginal tax rate) 
• Tax deductions are constant at 43% MTR
• Current RRSP value $310,000 (assume no carry forward)
• Current TFSA Value $92,000 (assume no carry forward)
• 2022 RRSP contribution limit based on available room based on 2021 income of $148,000
• Maximum RRSP contribution limit for 2022 is $29,120
• Assume CPP at age 65 is ($14,500) and OAS at age 65 is ($7,500) 
• 5% pre-retirement ROR and 2.5% post-retirement ROR (real rates of return)
• Plan ends at age 95 i.e., retired for 35 years 
• Shilpa has $14,000 per year to invest
• Would like 70% of current income in retirement ($148,000 *.7) = $103,600

 Calculate the dollar amount Shilpa requires to provide a retirement income of 70% pre-tax at age 60. *Receiving CPP and OAS at the earliest date.

1. How do you recommend Shilpa invest her savings annually to provide for this retirement income?
2. Demonstrate to Shilpa the benefit if any of receiving CPP at 65.
3. What is your recommendation to Shilpa as to when she should collect CPP and why?
4. Compare Shilpa's current taxable income of $148,000 to her taxable and tax-free income (if any) at her retirement. Does Shilpa achieve her goal?

2. Jerry (age 30) and his Uncle Leo require estate planning advice.  Uncle Leo (70 yrs.) has an MTR (30%) has been a widow for 4 years and retired for 5 years. Uncle Leo and Aunt Rose did not have children but have several estranged nieces and nephews and Uncle Leo's brother, George is still living whom he loathes. Jerry was like a son to Leo and his late wife Rose, which is why Uncle Leo would like Jerry to inherent his entire estate although he does not have a will. Jerry and his girlfriend (common-law spouse) Elaine, moved in with Uncle Leo 6 months ago to help him. Uncle Leo's assets are as follows: he has $1.1 million Fair Market Value (FMV) with an Adjusted Cost Base (ACB) of $550,000 in his RRIF with Rose still as beneficiary; $370,000 (FMV) $275,000 (ACB) in an RRSP inherited from Rose when she passed away with his estate as beneficiary; he has non-registered investments of $850,000 (FMV) $525,000 (ACB); Uncle Leo owns his own home worth $1,440,000 (FMV) and $425,000 (ACB). His TFSAs are worth (FMV) $195,000; $145,000(ACB) with Jerry as the beneficiary. He and Jerry own a rental property together registered "tenants-in-common" worth $900,000 (FMV); $500,000 (ACB) with an outstanding mortgage of $400,000.  Uncle Leo has one Life Insurance policy with a death benefit of $1,000,000 with Rose still as beneficiary. He took the policy out years ago, to ensure Rose could cover any unexpected expense should he die.

Assume today is December 31, 2022

1) Explain to Uncle Leo and Jerry which assets are exposed and not exposed to probate and why showing the specific dollar amount. (4 Marks).
2) Show Uncle Leo what his probate costs would be if he were to die today. (1 Mark).                  3) Calculate Uncle Leo's taxable income (based on the information provided) if he were to die today. (3 Marks). taxable income not tax owing
3) Assuming Uncle Leo does not die December 31, 2022, recommend 8 estate planning strategies to help reduce his probate costs and taxable income at death. (4 Marks).
4) Explain to Uncle Leo what could occur if he died without a will, and the importance of having a will given the current family dynamic. (3 Marks).

3. Victoria wants to build an education plan for her twins Brooklyn and Nicola.  You recommend 4 independent strategies she can consider:  1) invest into RESPs in the children's names; 2) invest into non-registered equity investments in the children's names; 3) use TFSAs invested in Vitoria's name; 4) borrow $100,000 to invest in Victoria's name.  Victoria has a total of $5,000 per year committed to education funding. Using an 8% ROR (all capital gains) for each strategy including re-investments; a 14-year timeframe(n=14); 50% MTR for Victoria, a 20% MTR for the twins for any taxable income over $15,000 in a year; and a 5% carrying cost on the leverage strategy (interest-only leverage). Show how each scenario would work with absolute optimization of the strategies from a tax perspective, redeeming all funds over a 4-year undergraduate degree (n=4) using a 1% ROR. For each strategy give Victoria 2 advantages and 2 disadvantages.  Which strategy would you recommend?