Robert who is 71 years old and Molly who is 65, have been married for 30 years. Robert worked 35 years and Molly worked 32. They have 3 grown children to whom they would like to leave an inheritance if they should predecease them. Molly worked part-time as an accountant and Robert as a quality control expert at an automotive manufacturing plant. Both have a low investment risk tolerance. Both are now retired. They have enough money to live on from government benefits and his Defined Benefit Pension Plan. They received an unexpected inheritance of $200,000 this year. Their particular financial situations are listed below:

Robert:

Birthdate; March 14th

Has an RPP that pays 1.8% of his best 3 out of his last five years salary

RRSP current value is $244,700 was $240,000 as of January 1st this year

Receives the full amount of OAS

Receives $940 a month in CPP benefits

Is in the 35% MTR

Molly:

Birthdate August 7th

RRSP current value is $91,600 was 89,000 as of January 1stthis year

Receives only 90% of the full OAS amount

Receives $360 a month in CPP benefits

Is in the 25% MTR

1. At a minimum, how many years has Molly lived in Canada?

2. Below is listed Roberts last five years of work. He worked for Eaton Yale Automotive for 28 years

and the benefit is based upon 1.8% of his best consecutivethree of his last five years. How much money before taxes does he receive each year from his pension? YEARSALARY

2007$76,000 2008 77,000 2009 79,000 2010 81,000 2011 76,000

3. You have told Robert that he is paying too much in taxes and that you can move some of his income

from the 35% MTR to the 25% MTR by arranging for him and Molly to fully split their CPP benefits. If they were to fully split their CPP to the greatest limit allowed by CRA, what would be each have in monthly CPP benefits?

4. Molly took $100,000 of their inheritance money and just yesterday purchased a 25-year term certain

annuity with a joint and survivor clause from Home Capital Corp paying 3% per year with payments starting at the beginning of the month. What amount of payment can she expect each month?

5. Roberts twin brother Conrad has complained to his brother that much of his OAS is clawed back.

Conrads full pension amount before the clawback is $6,400 a year. His taxable income is $89,500 and includes his OAS benefits, and the OAS clawback threshold is $77,580. How much is his clawback on his yearly OAS benefit? What is the amount of OAS benefit he will receive? Show all calculations.

6. Mollys younger sister will start collecting her CPP benefits on her 62 birthday. Had she

waited until age 65 she would have received $844 a month. How much will she actual receive? Show calculations.