Today's date Is July

1st. " Personal and Family Situation Nathalie and Phillipe Bouchard have been married for 35 years.

Nathalie is 60 years old; Phillipe is 62 years old. Both individuals immigrated to Canada from Belgium 37 years ago. Nathalie works in the human resources department of a large accounting firm and earns $47,500. Phillipe is a high school principal and earns $85,000 (his net income for this year is $70,000). The couple has two adult children: Andre and Celeste. Celeste is married to Justin; together they have a son named Marcel who just celebrated his first birthday in February of this year. Justin has had an offer to relocate to the U.S. If he and Celeste accept the move, it will mean a significant increase in his income.

Nathalie and Phillipe are extremely supportive of their children and actively involved in their lives. In particular, they happily provide care for Marcel while his parents are working.

Nathalie and Phillipe intend to continue working until they attain age 65. At that time, each individual will

Retirement Objectives Both

apply for CP and OAS benefits and in addition, they will both receive pension benefits from their respective employers. Nathalie will receive approximately $18,000 per year; Phillipe will receive approximately $40,000 per year.

- Personal Assets Nathalie and Phillipe have always been disciplined

savers and as such have accumulated a significant net worth. They own a principal residence as joint tenants currently valued at $850,000. Ten years ago, Nathalie inherited a cottage valued at $360,000 from her family-the property is registered in her name only. Phillipe has an RRse valued at $425,000 with the funds allocated 60% fixed income and 40% equitles. Nathalie is the annuitant under an individual RRSP valued at $170,000 as well as a spousal RRSP currently worth $250,000. The cumulative asset allocation of her plans is: 50% fixed income and 50% equity. The couple has named each other as the benefidary of their respective RRSPs. Their membership in their company's RPP means, for this year, Philipe only has RRSP contribution room of $7,000 while Nathalle only has $5, 225 in contribution room. The couple also has $390,000 in a joint investment account most of which is invested in a series of Government of Canada Bonds. In an individual non-registered, investment account Phillipe owns 2,500 shares of Big Money Inc which he purchased at a price of $9.00 per share. Earlier this year, he donated all of the shares to the United Way; at the time, the share price of Big Money was $38.00. Nathalle and Philipe have not yet established TFSAs however, it is llkely they will do so using some of the savings in their chequing account,

"Estate Planning As much as Nathalie and Phillipe managed their money and investments well over the year, they never dealt with a financial planner and consequently, neither person recognized te imporance of having a will. The intestacy legislation for their province of residence indicates a preferential share of $200,000 and distributive shares comprised of the remaining balance allocated as follows: 50% to me surviving spouse and 50% to the children of the deceased in equal shares per stipes.

Assume Nathalie dies today. Based on their current situation and assuming all available preferential provisions under the Income Tax Act are used, what asset would give rise to a tax liability?

O a) Nathalie's spousal and individual RRSPS

b) Nathalie's cottage

) c) Nathalie's 50% ownership interest in the couple's principal residence and their joint investment

account

d) Nathalie's death will not result in a tax liability this year.