Randall and Beth have been married for $22$ years. They have two children who are both independent and out of the house. Last year, the couple sold their business Chapstick Inc. to a multinational company. They feel they have more than they require in term of assets and cash flow and have been giving consideration to making donations to their favorite charity; an organization called Paws and Claws that finds homes for dogs and exotic parrots.

They were doing some research and came across an article in the Globe & Mail that shed some light on ways how charitable bequests can be made through insurance policies. The couple always had a risk management plan in place but after the sale of the business they are considering using their life insurance policies to plan a charitable gift. They are somewhat confused however as there are different implications to making such bequests and would like to speak to you in order to get some additional information. Below is a list of the insurance policies that the couple own: Policy Owner

Randall Policy Type Face Value CSV $($$$)$ Life Insured Beneficiary Annual Premium

Randall $10-$year term $250,000$ NA Beth Son $1,500$

Beth Universal Life $550,00088,500$ Randall Son $2,900$

Beth $5-$year term $300,000$ NA Beth Estate $1,200$

Beth Whole Life $175,00042,000$ Beth Daughter $1,800$

Universal Life $220,00035,500$ Randall Genevieve $($Friend$)2,200$

$1.$ If Randall and Beth wanted to transfer the ownership of all $5$ policies to Paws and Claws today through an absolute assignment, calculate the total amount of their donation receipt they would be eligible to receive $($ignore premiums$).$

$(2$ marks$)$

$2.$ If Randall and Beth decide to complete an absolute assignment of both their term policies and Beth$$s$\_\_$universal life policy as well as any applicable CSV$$s but continue to pay the premiums indefinitely for all the policies, calculate their eligible donation amount for the year. $(2$ marks$)$

$3.$ If Randall decides to name Paws & Claws as the beneficiary of his term policy and removes his son as beneficiary, calculate the donation amount in the year of Beth$$s death $($ignore premiums$).(1$ mark$)$

$4.$ What is the best course of action Randall can take to ensure that he becomes eligible for the donation in the year of death of the life insured $($Beth$)$ on his term life policy? $(1$ mark$)$

$5.$ Randall and Beth decide to complete an absolute assignment as alluded to in question #$1,$ the couple have incomes of $$200,000$ and $$90,000$ respectively. Which of the following statements are pertinent to their circumstances? $(2$ marks$)$

Note $1$: For those of you writing in D$2$L on Friday $->\_$Hint: Understand Charitable Donation Calculations

Note $2$: For those of you submitting manually by $11$:$59$pm Thursday $->\_$You are to answer the following question instead: In detail, provide $5$ consequences to having Beth$$s term policy structured the way it is$.$

$6.$ Based on your answer in question #$2,$ calculate the donation tax credit assuming the couple claims the donations individually $-$ income threshold for the year is $$202,800.(2$ marks$)$