Use CPP as a Force for Good

For many wealthy retirees, their Canada Pension Plan payment is just icing on the cake.  For affluent Canadians, it's more of a tax hiccup than a meaningful source of income.   Instead of using CPP in its traditional manner, one can choose to use it as a force for good.

Jim and Cathy Gauci, age 65, have recently retired. They sold their business and worked with their professional advisors to complete an estate freeze and take advantage of their capital gain exemption limits. Now in their second year of retirement, they turned on CPP and will each receive the max payment of $1364.60 monthly (over $16k annually for each, taxable income). At their level of wealth, they don't need this extra money to support their lifestyle.

This couple have always wanted to be generous and support their local hospital beyond their annual $1000 donation.  They want to leave a significant charitable legacy as their children were well cared for in the neo-natal unit decades ago. 

Cathy embraced the idea of using her CPP as a force for good. At age 82, she passed away. Her CPP created a $400,000 donation to the hospital. Recently, Cathy's great granddaughter was born in that hospital, and the family waited for the happy news in "Cathy Gauci's Teddy Bear" space.

In addition, Cathy's estate received a charitable donation receipt for $400,000. This incredible legacy strategy reduced Cathy's terminal estate tax by 100%, and reduced the income tax she paid the year before, creating a refund. Cathy's heirs received a better-than-expected inheritance, the hospital has new equipment for newborns and the CRA got less tax. Win. Win. Win.

Use your CPP as a multiplier and a force for good, just like Cathy.

Taivi Tayler, RRC, CLU, Certified Financial Planner

www.taylerinsurance.com         

Source: https://www.canada.ca/en/services/benefits/publicpensions/cpp/payment-amounts.html ; Manulife Mar25.2024