Estate Planning with Segregated Funds Including … · Estate Planning with Segregated Funds...

Estate Planning with Segregated Funds Including SunWise® Elite Plus

issued by Sun Life Assurance Company of Canadamanaged by CI Investments Inc.

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Table of Contents

> Tips for a contract structure that meets your clients’ needs . . . . . . . . . . . . . . . . . . . . . . . . . .2

Non-registered policy

> Individually Owned, Single Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

> Individually Owned, Joint Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

> Corporately Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

> Joint Tenants with Rights of Survivorship (JTWROS), Single Annuitant . . . . . . . . . . . . . . . . .8

> Joint Tenants With Rights of Survivorship (JTWROS), Joint Annuitant . . . . . . . . . . . . . . . . . .9

> Joint Tenants in Common, Single Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

> Quebec - Joint ownership, Joint Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

> Reference Notes for Non-Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Registered Retirement Savings Plan (RRSP) policy . . . . . . . . . . . . . . . . . . . . . . . . 13

Registered Retirement Income Fund (RRIF) policy . . . . . . . . . . . . . . . . . . . . . . . . . 14

Tax Free Savings Account (TFSA) policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

> Reference Notes for Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16


Including SunWise® Elite Plus

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An estate plan represents the blueprint for your client’s financial lifeand your client’s family’s financial future. Proper estate planning takesfar less time and effort than most people imagine, and it can providetremendous peace of mind.

Estate planning is a process that helps investors accumulate andconserve assets. It addresses their legal and financial concerns,taking into account their goals and tax considerations. It also takesadvantage of existing laws and funding vehicles to save on taxpayments and help manage property in an efficient and profitableway during their lifetime.

As the baby-boomer generation ages, more and more investors arerealizing the importance of creating an estate plan that ensures theirloved ones are provided for in the best way possible. Each person willapproach estate planning differently, as we all have uniquemotivations and expectations for our estates. Estate plans are not allthe same. Every estate plan will have different nuances and goalswhich are driven by individual priorities and goals.

To meet the growing needs of investors putting more emphasis onestate planning, CI Investments offers products like segregated funds.Unfortunately, segregated funds are often sold solely as mutual fundswith guarantees. This could not be a greater misrepresentation ofwhat segregated funds really are. Segregated funds are insurancecontracts that are invested in and provide the potential return ofunderlying mutual funds. As insurance contracts, segregated fundshave complexities in the variety of ways they can be set up thatcannot be overlooked as they could provide a different outcome uponthe annuitant’s death, than what may have been intended.

On the following pages you will find a wide range of the morecommon ways to structure a segregated fund contract for differentregistration types. Each example will demonstrate the effect thevarious owner(s), annuitant(s) and beneficiary(ies) will have on thecontinuation of the contract and potential tax implications upon thedeath of any of the parties involved. Use these examples to helpensure the outcome matches your expectations when setting up asegregated fund.

Estate Planning with Segregated Funds

The information contained herein is for information purposes only, and pertains only to potential Canadian tax and legal implications surroundingsegregated funds. It is not intended to provide legal, accounting, taxation or other professional advice to advisors or to their clients, whosesituations may involve results not discussed here. We caution that no one should act upon this information without a thorough examination ofthe legal and tax situation with their own professional advisors, taking into account their own unique circumstances.


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Below are some quick pointers that can add a value to you and to yourclients and that will help you meet your client’s objectives.

OWNERSHIP STRUCTUREHow can I ensure that non-registered assets are being passed to ….

… my spouse?When a client wants to ensure the passing of assets to a spouse, thesimplest contract structure that facilitates this is a single owner,single annuitant contract with the client as owner and annuitant, andthe spouse as beneficiary.

… our children?When a couple wants to ensure the passing of the assets to theirchildren upon their deaths, the best contract structure to facilitate thisis a Joint Owners with Rights of Survivorship type of contract withjoint annuitants (same as the joint owners) with the children as thenamed beneficiaries. Upon the death of the first owner/annuitant, thecontract continues and is reregistered in the name of the survivingspouse only. Upon the death of the last surviving spouse, the deathbenefit becomes payable to the named beneficiaries.

Caution! For Joint Tenants in Common policies (with jointannuitants), upon the death of one of the owners, the ownership ofthe share belonging to the deceased becomes part of the deceased’sestate. If the estate executor elects to liquidate the deceased’sportion upon receipt of instructions signed by both the estate executorand the surviving owner, that portion of the policy (inclusive of anyguarantees applicable to that portion) will be surrendered and will notbe eligible for a death benefit guarantee.

Note: In Quebec, Joint Owners with Rights of Survivorship contractsare not permitted. All contracts held jointly are treated similarly to“Joint Tenants in Common”. To ensure the contract can continue, asubrogated contract owner should be named.

For example, for a jointly owned contract where Joe and Jane are theowners, a contract set up with Joe named subrogated owner for Janeand Jane named subrogated owner for Joe allows for a treatmentsimilar to “Joint with Rights of Survivorship” in other provinces. Uponthe death of one of the owners, the policy becomes reregisteredentirely in the name of the surviving owner.

Can the owner be a different person than the annuitant?Yes, however, this is only possible for non-registered policies. Forregistered policies, the contract annuitant and the contract ownermust be the same person.

Caution! For non-registered policies, where the owner is differentfrom the annuitant, upon the death of the annuitant, the contract isterminated and the contract benefits become payable to thebeneficiaries. Also, upon the death of the owner, if no successorowner has been named, ownership of the contract will pass to theowner’s estate. A probated will may be required to determineownership of the contract.

If a successor owner has been named on the policy, the policyownership will automatically pass to the successor owner, on thedeath of the owner.

For a Tax-Free Savings Account (TFSA), full ownership rights under thecontract can be passed to the surviving spouse if the surviving spouseis named as the sole primary beneficiary. Normal successorownership options are not applicable under a TFSA plan type.

How can I add a successor owner?A successor owner may be added at any time with a written requestsigned by the policy owner.

ANNUITANTWho is the annuitant?The annuitant of a segregated funds policy is the person upon whoselife the contract is based. Upon the death of the annuitant, the deathbenefit guarantee becomes payable.

Note: For corporately owned policies, the annuitant must be a livingperson. In our experience, the annuitant is usually the head of the corporation.

Caution! It is not advisable to name the same person as bothbeneficiary and annuitant, as the death benefit proceeds are paidupon the death of the annuitant. In the case of a contract with theannuitant and the beneficiary as the same person, the death benefitproceeds will be paid to the owner (or to the estate of the owner ifthe owner is also the same person).

Can I have more than one annuitant?Yes, the SunWise Elite (including SunWise Elite Plus) is designed toallow for two annuitants to be named under a contract (for non-registered policies). Upon the death of the annuitant (last surviving

Tips for a contract structure that meets your clients’ needs


Including SunWise® Elite Plus

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annuitant for policies with a joint annuitant structure), the contractterminates and the death benefit becomes payable.

Can I add a second annuitant to my policy?Yes, a joint annuitant can be added to a policy at any time prior to thedeath of the annuitant. After the addition of the new joint annuitant,the Death Benefit Proceeds will become payable only upon the deathof the last surviving annuitant.

BENEFICIARIES A beneficiary designation is a very important benefit of a segregatedfund contract. When a beneficiary designation is in effect, deathbenefit proceeds can flow directly to the named beneficiaries on thedeath of the last surviving annuitant and generally will be processedwithout the requirement for probate. Also, a beneficiary designationmay offer an exemption from seizure during the life of the annuitant.

A beneficiary designation may be made at any time with a writtenrequest from the policy owner.

Can a person acting with a Power of Attorney (POA) over thecontract owner’s financial affairs appoint a beneficiary?At present time, the ability of a person acting under a POA todesignate a beneficiary is uncertain. A beneficiary designation issimilar to a testamentary decision, which usually can only be made ina will and a person acting under a POA is not capable of making a willfor another person.

Can the beneficiary of my segregated funds policy bedifferent from the beneficiary of my will?Yes, the beneficiary named on the segregated funds policy can bedifferent from the beneficiary in the client’s will. The death settlementof the policy flows outside of the estate.

Caution! For joint non-registered policies with one annuitant, it isadvisable that the joint owner (who is not the annuitant) be named asbeneficiary. Upon the death of the policy annuitant, the death benefitproceeds will be paid to the named beneficiary and the contract willbe terminated.

Can I name a minor as beneficiary for my segregated funds policy?In all provinces other than Quebec, if a minor or a legally incompetentperson is named as the policy beneficiary, it is recommended that atrustee is named on behalf of the beneficiary (eg. Trustee ITF minorbeneficiary).

If a minor beneficiary is named without a trustee, the estatesettlement payment may be delayed as a guardian must be appointedthrough the courts.

In Quebec, the payment of the death benefit may be made to theminor beneficiary’s surviving parent as tutor. If there is no survivingparent, a dative tutor appointment will be made either through thewill of the parents, court order, or based on a previous writtenappointment by the parents to the Public Curateur.

ExamplePolicy Owner: JoeAnnuitant: JoeBeneficiary: Minor child without a trustee:On the death of the annuitant, the policy terminates and the proceedsmay be paid into the applicable provincial courts for the beneficiary.A Guardian can be appointed through court. If no Guardian can beappointed, the Public Guardian and Trustee, or provincial equivalentmay become the trustee of the minor child’s property.

What is an irrevocable beneficiary?If a beneficiary has been named as irrevocable, the owner of thepolicy may not make certain changes to the contract without theconsent of the irrevocable beneficiary (like changing the beneficiarydesignation, making withdrawals, changing guarantee options, etc.).

Caution! It is not advisable to have a minor as irrevocablebeneficiary, as appointment of a beneficiary as irrevocable givescontrol to the named beneficiary over the policy. The minorirrevocable beneficiary cannot consent to any change to the policy.The policy is frozen until the minor reaches the age or majority, unlessa Guardian of Property is appointed by the courts.

Can my spouse continue the benefits of my registeredsegregated funds policy upon my death?For RRSP or RRIF policies, to ensure the continuation of the benefits(inclusive of GMWB benefits), the spouse must be named as the soleprimary beneficiary.


Estate Planning with Segregated FundsNon-registered policyIndividually Owned, Single Annuitant

JoeAverage

JoeAverage

JoeAverage

JoeAverage

JoeAverage

JoeAverage

JoeAverage

SusieAverage(Spouse)

Nonenamed

Nonenamed

Nonenamed

Nonenamed


Any adultother thanspouse

Estate

JoeAverage

Joe Average

JoeAverage

JoeAverage

JoeAverage

Policy terminates and theproceeds are payable to thebeneficiary.


Policy terminates and theproceeds are payable to the estate. Probate may berequired. Probate legislationvaries by province.

Policy continues in force sincethe annuitant is still living.Joe’s estate now owns thecontract. The Death Benefit is not payable at this time.

Actual disposition. Taxslips are issued to Joeand the gain is taxable on his final tax return. Atax-deferred transfer tospouse is not possible.

Actual disposition. Taxslips are issued to Joeand the gain is taxable on his final tax return.


A tax slip is issued to Joeand the gain is taxable onhis final tax return. Anygain after the date ofdeath up until the contractsettlement date may betaxable to Joe’s estate.

Annuitant3 Beneficiary Who died? What happens on death? 2 Tax Implications

GMWB is terminated. No furtherGWA payments under this riderare made.



GMWB rider continues. Any GWApayments under this rider arepaid to the new owner (Estate ofJoe) until the beneficiaries of theestate proceeds terminate thecontract or take ownership of thecontract.

Effect on GMWB – GWBWithdrawal Period Option (GWA)

GMWB is terminated. No furtherLWA payments under this riderare made.



GMWB rider continues. Any LWA payments under this riderare paid to the new owner (Estateof Joe) until the beneficiaries ofthe estate proceeds terminate the contract or take ownership of the contract.

Effect on GMWB – GWB Lifetime Option (LWA)Owner Successor

Owner 1

Estate Planning with Segregated FundsN i d li

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Estate Planning with Segregated FundsNon-registered policyIndividually Owned, Single Annuitant continued

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Annuitant3 Beneficiary Who died? What happens on death? 2 Tax ImplicationsEffect on GMWB – GWBWithdrawal Period Option (GWA)


Owner 1

JoeAverage

JoeAverage

JoeAverage





Any adultother thanspouse.

Any adult

JoeAverage

JoeAverage

JoeAverage

JoeAverage

JoeAverage

SusieAverage 2

(Spouse)

Policy continues in forcesince the annuitant is stillliving. Susie Average inheritsas successor owner with allof the rights of the originalowner, including the right toname a beneficiary.

The successor owner inheritsthe policy, which is still inforce since the annuitant isstill living.

Policy terminates and thedeath benefit is payable tothe beneficiary.

No deemed disposition atdeath if they are spouses. Note: If the successorowner is not the spouse,then there would be adeemed disposition on thedeath of the owner as thiswould be considered atransfer of ownership.

Deemed disposition. Taxslips are issued to Joeand the gain is taxable onJoe’s final tax return.

Actual disposition as thecontract is terminated.Tax slips are issued to Joeand the gain is taxable onJoe’s tax return.

GMWB rider continues. Anyremaining GWA payments underthis rider are paid to the newowner (Susie Average).

GMWB rider continues. Anyremaining GWA payments underthis rider are paid to the newowner.


GMWB rider continues. Anycontinuing LWA paymentsunder this rider are paid to thenew owner (Susie Average).

GMWB rider continues. Anycontinuing LWA paymentsunder this rider are paid to thenew owner.

GMWB is terminated. Nofurther LWA payments underthis rider are made.

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Estate Planning with Segregated FundsNon-registered policyIndividually Owned, Joint Annuitant



Owner 1

JoeAverage

JoeAverage

JoeAverage

JoeAverage

JoeAverageSusieAverage(spouses)



MikeAverageMaryAverage(children)

Nonenamed

Nonenamed

Nonenamed

MikeAverageMaryAverage

Anybeneficiaryother than theannuitants.

Any adultother than theannuitants.

Any adultother than theannuitants.

Any adultother than theannuitants

JoeAverage(who is alsothe LWAAnnuitant)

SusieAverage(not theLWAAnnuitant)

JoeAverageand SusieAverage(concurrentdeath)

JoeAverage

Policy continues in forcesince one annuitant is stillliving. Joe’s estate now ownsthe policy. No death benefit is payable at this time. Theestate will dictate the termsand conditions of the contractuntil the beneficiaries of theestate proceeds terminate the contract. The policycontinues as a single owner,single annuitant.

Policy continues in forcesince one annuitant is stillliving. No death benefitpayable at this time. Joecontinues to own the policy. Policy continues as singleowner, single annuitant.See single owner annuitantrules regarding death ofsecond annuitant (Joe)

Policy terminates and theproceeds are payable to the beneficiary.

Policy continues in forcesince the annuitants are still living. No death benefitpayable at this time. Mike and Mary inherit the policy.

GMWB rider continues. Any GWApayments under this rider arepaid to the Estate of Joe until the beneficiaries of the estateproceeds terminate the contractor take ownership of the contract.

GMWB rider continues. Anyremaining GWA payments under this rider continue to bepaid to Joe.


GMWB rider continues. Anyremaining GWA payments under this rider are paid to the new owners.

The surviving annuitant becomesthe new LWA Annuitant. Providedthe new LWA Annuitant is overthe age of 65, the LWA ThresholdAmount is reset to an amountequal to the greater of (i) themarket value, and (ii) theRemaining GWB.The LWA is recalculated to anamount equal to 5% of the newLWA Threshold Amount. Theowner may also select to receivethe GWA rather than the LWA.

GMWB rider continues. Anycontinuing LWA paymentsunder this rider are paid to Joe.


GMWB rider continues. Anycontinuing LWA paymentsunder this rider are paid to the new owners.

Deemed disposition. Taxslips are issued to Joe asof the date of death andthe gain is taxable on hisfinal tax return. Any gainafter the date of death istaxable to Joe’s estate.

Not a disposition.


Actual disposition. Taxslips are issued to Joeand the gain is taxable on his final tax return


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Estate Planning with Segregated FundsNon-registered policyCorporately Owned

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Owner 1

Note – Joint annuitants are permitted for Corporate-owned policies.

XYZCorporation

XYZCorporation

XYZCorporation

JoeAverageSusieAverage(businessowners)

JoeAverage

JoeAverage

Notapplicable–Corporationcannot die.



XYZCorporation

XYZCorporation

Any adult

One of theAnnuitants(who is alsothe LWAAnnuitant)

JoeAverage

JoeAverage

Policy continues in force asthere is a surviving annuitant.


Policy terminates and theproceeds are payable to thebeneficiary.For a beneficiary designationother than the corporation, we require a letter from the signing officers of thecompany acknowledging that they understand theimplications of this designationand, that on the death of theannuitant, the proceeds will bepaid entirely to the beneficiaryand not to the corporation.

GMWB continues until the deathof the last surviving annuitant.



The surviving annuitant becomesthe new LWA Annuitant.Provided the new LWA Annuitantis over the age of 65, the LWAThreshold Amount is reset to anamount equal to the greater of (i)the market value, and (ii) theRemaining GWB.The LWA is recalculated to anamount equal to 5% of the newLWA Threshold Amount.The owner may also elect toreceive the GWA rather thanthe LWA.



Not a disposition

Actual disposition. Thegain is taxable to XYZCorporation and is noteligible for Small BusinessTax Rate.

Actual disposition. The gain is taxable to XYZ Corporation – noteligible for Small BusinessTax Rate.

Caution: Entire proceedscould be fully taxable in the hands of thebeneficiary as anemployee benefit,shareholder benefit ortaxable death benefit.

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Estate Planning with Segregated FundsNon-registered policyJoint Tenants with Rights of Survivorship (JTWROS), Single Annuitant* (For contracts established in all provinces except Quebec)



Owner 1




JoeAverage

JoeAverage

MikeAverage

Nonenamed

Nonenamed

Nonenamed

Any adultother thanthe annuitant.

Anybeneficiaryother thanthe annuitant.

Anybeneficiaryother thanthe annuitant.

JoeAverage

SusieAverage

MikeAverage


Policy continues since theannuitant is still living. Thesurviving owner inherits thepolicy. No Death Benefit ispayable at this time.

Policy terminates and theproceeds are paid to thebeneficiary.

Actual disposition. Taxslips are issued in thename of both owners.Joe’s gain is taxable onhis final tax return andSusie’s gain is taxable on her tax return. 4

Not a disposition.

Actual disposition. Taxslips are issued in thename of both owners.


GMWB continues. GWApayments under this rider madeto the surviving owner.



GMWB rider continues. Anycontinuing LWA paymentsunder this rider are paid to Joeas surviving owner.


*Joint Tenants with Rights of Survivorship is not applicable for Quebec residents.


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Estate Planning with Segregated FundsNon-registered policyJoint Tenants With Rights of Survivorship (JTWROS), Joint Annuitant* (For contracts established in all provinces except Quebec)

9

Annuitant Beneficiary Who died? What happens on death? 2 Tax ImplicationsEffect on GMWB – GWBWithdrawal Period Option (GWA)


Owner 1







Nonenamed

Nonenamed

Nonenamed

Any adultother than the annuitant.

Any adultother than the annuitants.

Any adultother than the annuitants.

One of theAnnuitants2

(who is alsothe LWAAnnuitant)

One of theAnnuitants(who isNOT theLWAAnnuitant)

BothAnnuitants(concurrentdeath)

Policy continues in force sinceone annuitant is still living.Surviving owner inherits thepolicy.

Policy continues in force sinceone annuitant is still living.Surviving owner inherits thepolicy.


No deemed disposition atdeath if they are spouses. Note: If the joint ownersare not spouses, thenthere would be a deemeddisposition on the death ofone of the annuitants asthis would be considereda transfer of ownership.

No deemed disposition atdeath if they are spouses.Note: If the joint ownersare not spouses, thenthere would be a deemeddisposition on the death ofone of the annuitants asthis would be considereda transfer of ownership.

Actual disposition. Taxslips are issued in thename of both owners.Joe’s gain is taxable onhis final tax return andSusie’s gain is taxable onher final tax return. 4




The surviving annuitantbecomes the new LWAAnnuitant. Provided the newLWA Annuitant is over the ageof 65, the LWA ThresholdAmount is reset to an amountequal to the greater of (i) themarket value, and (ii) theRemaining GWB.The LWA is recalculated to anamount equal to 5% of the newLWA Threshold Amount.The surviving owner may alsoelect to receive the GWA ratherthan the LWA.

GMWB rider continues. Anycontinuing LWA payments underthis rider are paid to Joe.


*Joint Tenants with Rights of Survivorship is not applicable for Quebec residents.

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Estate Planning with Segregated FundsNon-registered policyJoint Tenants in Common, Single Annuitant* (For contracts established in all provinces except Quebec)




JoeAverage

JoeAverage

JoeAverage

Nonenamed

Nonenamed

Susie’sSuccessorOwner isJoeAverage


Any beneficiaryother than the annuitant.


JoeAverage

SusieAverage

SusieAverage


Policy continues since theannuitant is still living. Nodeath benefit payable at thistime. Susie’s half of the policybecomes the property ofSusie’s estate. Susie’s estateand Joe Average will dictatethe terms and conditions ofthe account until Joe Averageand the beneficiaries of theestate proceeds terminate theaccount. Policy continuesjointly owned by the estate of Susie and Joe Average.

Policy continues since theannuitant is still living. Susie’shalf of the policy passes toJoe as successor owner.


GMWB continues. GWApayments under this rider madeto the continuing joint owners(Joe and the estate of Susie).

GMWB continues. GWApayments under this rider madeto Joe as sole owner.


GMWB continues. LWApayments under this rider madeto the continuing joint owners(Joe and the estate of Susie).

GMWB continues. LWApayments under this rider madeto Joe as sole owner.

Actual disposition. Taxslips are issued in thename of both owners.Joe’s gain is taxable onhis final tax return andSusie’s gain is taxable on her tax return. 4

Since policy is JointTenants in Common andno Successor Ownerlisted, tax slips are issuedin the name of bothowners. Deemeddisposition of Susie’sportion. No tax on capitalgain of Joe’s portion.Susie’s gain may betaxable on her final taxreturn, depending uponher estate distribution.

No deemed disposition atdeath if they are spouses. Note: If the successorowner is not the spouse,then there would be adeemed disposition onSusie’s death as thiswould be considered atransfer of ownership.

*Joint tenants in Common is not applicable for Quebec residents.



Owner 1


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Estate Planning with Segregated FundsNon-registered policyQuebec – Joint ownership, Joint Annuitant

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Nonenamed

Joe’sSubrogatedOwner isSusie andSusie’sSubrogatedOwner isJoe.



One of theAnnuitants(who is alsothe LWAAnnuitant)

One of theAnnuitants(who isNOT theLWAAnnuitant)

Policy continues since theannuitant is still living. Nodeath benefit payable at this time. Susie’s half of the policybecomes the property ofSusie’s estate.Joe Average and Susie’sestate will dictate the termsand conditions of the accountuntil Joe Average and thebeneficiaries of the estateproceeds terminate theaccount. Policy continuesjointly owned by the estate of Susie and Joe Average.

Policy continues in force since one annuitant is stillliving. Surviving owner inheritsthe policy.

GMWB continues. GWA paymentsunder this rider made to JoeAverage and Susie’s estate.

GMWB continues. GWA paymentsunder this rider made to thesurviving owner.

The surviving annuitant becomesthe new LWA Annuitant.Provided the new LWA Annuitantis over the age of 65, the LWAThreshold Amount is reset to anamount equal to the greater of (i)the market value, and (ii) theRemaining GWB.The LWA is recalculated to anamount equal to 5% of the newLWA Threshold Amount.The surviving owner may electGWA rather than the LWA.

GMWB rider continues. Anycontinuing LWA payments underthis rider are paid to Joe.

Due to a different provincial law on ownership in Quebec, the concepts of “Joint with Right of Survivorship” or “Joint Tenants in Common” do not exist in Quebec. Contracts can however be heldjointly, and they are treated similarly to a “Joint Tenants in Common” contract in other provinces (see details above), unless a subrogated policy owner is named. For a jointly owned contract, a contractset up with Joe named subrogated policy owner for Susie and Susie named subrogated policy owner for Joe allows for a similar treatment to “Joint with Right of Survivorship” in other provinces.

Tax slips are issued in the name of both owners.Deemed disposition ofSusie’s portion.No tax on capital gain of Joe’s portion. Susie’sgain may be taxable onher final tax return,depending upon herestate distribution. Spousal rollover provisioncould apply in this casebecause Joe is Susie’sspouse. The transfer toJoe will be at cost andtherefore avoid tax.

Tax slips are issued in the name of the survivingowner, since the survivingowner inherits the policy.No deemed disposition for the account, if policycontinues in the name of the surviving owner.Spousal rollover provisioncould apply, because Joe is Susie’s spouse. The transfer to Joe will be at cost and thereforeavoid tax.


Effect on GMWB – GWB Lifetime Option (LWA)Owner Subrogated

Owner 1

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Estate Planning with Segregated FundsReference Notes for Non-Registered Plans1 Successor owner also often referred to as Contingent Owner. In Quebec a successorowner is referred to as Subrogated Owner.

2 Beneficiary designation guidelines:• Owners, successor owners and those who inherit ownership of the policy always

have the right to name a new beneficiary (once they become owners), except wherethe beneficiary has been named irrevocably, in which case written consent isrequired from the irrevocable beneficiary.

• If the annuitant dies and there is no surviving beneficiary, proceeds are payable tothe owner.

• If the owner/annuitant dies, and there is no surviving primary or contingentbeneficiary, death proceeds are payable to the annuitant’s estate and probate mayapply. In cases where the owner is not the annuitant, and there is no survivingbeneficiary, the proceeds payable on the annuitant’s death would be payable to the owner.

3 Policy continuation can occur for single annuitant policies with the addition of a newjoint annuitant at any time prior to the death of the annuitant. After the addition of thenew joint annuitant, the Death Benefit Proceeds will become payable only upon thedeath of the last surviving annuitant.

Minor named as beneficiaryAll provinces except QuebecBeneficiary – Minor without a Trustee – Upon the death of the annuitant, the Policyterminates and the proceeds may be paid into the applicable provincial courts for thebeneficiary. A guardian may be appointed through court. If no guardian can beappointed, the Public Guardian and Trustee or provincial equivalent of that province maybecome the guardian of the minor child’s property. Beneficiary – Minor with a Trustee – Policy terminates and the proceeds are payable tothe Trustee in trust for minor beneficiary. The trustee can be appointed on the applicationat time of plan establishment, through the applicable beneficiary change form or on alegal document. Provincial legislation governs trustee use of the proceeds. Consult alegal professional for details.

QuebecBeneficiary – Minor without a surviving parent as tutor – Policy terminates and theproceeds are paid to the Ministry of Finance. A dative tutor may be appointed eitherthrough the will of the parents, court order, or written appointment by the parents to thePublic Curateur.Beneficiary – Minor with a surviving parent as tutor – Policy terminates and theproceeds are payable to the tutor (parent) for the minor child.

Financially dependent disabled adult son or daughter named as beneficiary

Policy terminates and the proceeds are payable to the beneficiary. If the beneficiary islegally incapable, the proceeds would be payable to the guardian (in Quebec: tutor orcurator). Proceeds may negatively impact provincial disability income supportentitlements. Disability income support varies with provincial legislation. Consult a legalprofessional for details.

4 Note that when joint owners are spouses or common-law partners, as defined forIncome Tax Act purposes, rules contained in the Income Tax Act generally require thefunds to be taxed in proportion to each party’s actual financial contribution to the fund.It is up to the owners of the contract to track each party’s financial contribution to thefund and to file the tax slips accordingly.

Note – If a policy is terminated due to the death of the last surviving annuitant, thebeneficiary will receive the greater of the Death Benefit or the Market Value. If a policyremains in force, the contract guarantees remain intact.

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Estate Planning with Segregated FundsRegistered Retirement Savings Plan (RRSP) policy

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Joe Average

Joe Average

Joe Average

Susie Average (Spouse)

Any adult other thanspouse or financialdependant disabledchildren.

Estate

Policy terminates and spouse hasthe following options:a) to transfer the monies and anyexisting benefits intact to apersonal RRSP. This is processedas a 60L transfer.b) to transfer the Death Benefit toa personal RRSP.c) receive a cash payment of theDeath Benefit.


Policy terminates and theproceeds are payable to the estate.

The tax slips are issued to the ownerfor the value at date of death. Susiemay elect a tax-deferred rollover forpart or all of the death proceeds to herown RRSP or RRIF plan.

The tax slips are issued to Joe for thevalue at date of death, which is fullytaxable on his final tax return. Thebeneficiary may receive a tax slip forany income earned between the dateof death and the settlement date.

The tax slips are issued to Joe for thevalue at date of death, which is fullytaxable on his final tax return. The estatemay receive a tax slip for any incomeearned between the date of death andthe settlement date. Annuitant’s legalrepresentative and qualified beneficiarymay be able to jointly elect to have all orpart of the death proceeds treated as a“refund of premiums”, depending upon theterms of the will. There may be additionaltax planning opportunities availabledepending on the terms of the will (e.g.purchasing an annuity for minor child).

Owner/ Annuitant Beneficiary What happens on deathof the owner/annuitant? Tax Implications

a) GMWB continues. GWApayments under this rider aremade to Susie.b) GMWB is terminated. Nofurther GWA payments under thisrider are made.c) GMWB is terminated. Nofurther GWA payments under thisrider are made.



Effect on GMWB – GWBWithdrawal Period Option (GWA)

a) Provided Susie is over the age of 65upon the transfer, the LWA ThresholdAmount is reset to an amount equal tothe greater of (i) the market value, and(ii) the Remaining GWB.The LWA is recalculated to an amountequal to 5% of the new LWA ThresholdAmount. Susie may elect GWA rather than the LWA.b) GMWB is terminated. No further LWApayments under this rider are made.c) GMWB is terminated. No further LWApayments under this rider are made.

GMWB is terminated. No further LWApayments under this rider are made.


Effect on GMWB – GWB Lifetime Option (LWA)

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Estate Planning with Segregated FundsRegistered Retirement Income Fund (RRIF) policy

Joe Average

Joe Average

Joe Average


Any adult other than aspouse, common-lawpartner or financiallydependent children.

Estate

Susie may: a) elect spousal continuance ofthe benefits and assume thepolicy as successor annuitant b) terminate the policy andtransfer the Death Benefit to apersonal RRIF c) terminate the policy andreceive the Death Benefit of thepolicy in cash


Policy terminates and theproceeds are paid to estate ofthe deceased.

a) If Susie elects to assume the policyas successor annuitant, tax slips areissued to Joe for all payments thatwere made up to date of death andSusie would receive tax slips for allpayments made after date of death.b) If Susie elects to establish a newpolicy in her name, tax slips would beissued to Joe for all proceeds thatwere paid up to the date of death andSusie would receive tax slips for thevalue at date of death as a refund ofpremiums.c) If Susie decides to take the deathbenefit proceeds in a lump sum, taxslips issued to Joe for all paymentsthat were made up to the date of deathand the value of the policy at the dateof death.

The tax slips are issued to Joe for thevalue at date of death, which is fullytaxable on his final tax return. Thebeneficiary may receive a tax slip forany income earned between the dateof death and the settlement date.

The tax slips are issued to Joe for thevalue at date of death, which is fullytaxable on his final tax return. Theestate may receive a tax slip for anyincome earned between the date ofdeath and the settlement date.

a) GMWB continues. GWApayments under this rider aremade to Susie.b) GMWB is terminated. No furtherGWA payments under this riderare made.c) GMWB is terminated. No furtherGWA payments under this riderare made.



a) Provided Susie is over the age of 65upon transfer, the LWA ThresholdAmount is reset to an amount equal tothe greater of (i) the market value, and(ii) the Remaining GWB.The LWA is recalculated to an amountequal to 5% of the new LWA ThresholdAmount.Susie may elect GWA rather than theLWA.b) GMWB is terminated. No further LWApayments under this rider are made.c) GMWB is terminated. No further LWApayments under this rider are made.



Owner/ Annuitant Beneficiary What happens on deathof the owner/annuitant? Tax ImplicationsEffect on GMWB – GWB

Withdrawal Period Option (GWA) Effect on GMWB – GWB Lifetime Option (LWA)

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Estate Planning with Segregated FundsTax Free Savings Account (TFSA) policy

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Owner/ Annuitant Beneficiary What happens on deathof the owner/planholder? Tax ImplicationsEffect on GMWB – GWB

Withdrawal Period Option (GWA) Effect on GMWB – GWB Lifetime Option (LWA)

Joe Average

Joe Average

Joe Average


Any adult other than aspouse, common-lawpartner or financiallydependent children.

Estate

Susie may: a) elect spousal continuance ofthe benefits and assume thepolicy as successor planholder(where Susie is named as thesole beneficiary).b) terminate the policy andtransfer the Death Benefit to apersonal TFSA.c) terminate the policy andreceive the Death Benefit of thepolicy in cash.


Policy terminates and theproceeds are paid to estate ofthe deceased.

a) If Susie elects to assume the policyas successor planholder, (where Susieis named as the sole beneficiary), notax slips will be issued to either Joe or Susie.b) If Susie elects to establish a newpolicy in her name, no tax slips will be issued to Joe. The proceedstransferred to Susie’s policy would not be considered a contribution if theapplicable CRA forms are completedand filed with the CRA within 30 daysof the transfer.c) If Susie decides to take the deathbenefit proceeds in a lump sum, taxslips will be issued to Susie for anyincome earned between the date ofdeath and the settlement date.

There will be no tax slips issued to Joe.The beneficiary may receive a tax slipfor any income earned between thedate of death and the settlement date.

There will be no tax slips issued toJoe. The estate may receive a tax slipfor any income earned between thedate of death and the settlement date.

a) GMWB continues. GWApayments under this rider aremade to Susie.b) GMWB is terminated. No furtherGWA payments under this riderare made.c) GMWB is terminated. No furtherGWA payments under this riderare made.



a) Provided Susie is over the age of 65upon transfer, the LWA ThresholdAmount is reset to an amount equal tothe greater of (i) the market value, and(ii) the Remaining GWB.The LWA is recalculated to an amountequal to 5% of the new LWA ThresholdAmount.Susie may elect GWA rather than the LWA.b) GMWB is terminated. No further LWApayments under this rider are made.c) GMWB is terminated. No further LWApayments under this rider are made.



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Estate Planning with Segregated FundsReference Notes for Registered PlansFor GMWB Benefits continuance on the SunWise Elite product (TFSA, RRSP, RRIF, LIF,PRIF, LRIF), we require that the spouse be the sole primary beneficiary.

Minor named as beneficiary for registered plansThe annuitant’s legal representative may or may not be able to jointly elect to have all orpart of the death proceeds treated as a “refund of premiums”, depending upon the termsof the will. There may be additional tax planning opportunities available (e.g. purchasingan annuity for a minor child).

All provinces except Quebec: Beneficiary – Minor without a Trustee – Upon the death of the annuitant, the Policyterminates and the proceeds may be paid into the applicable provincial courts for thebeneficiary. A guardian may be appointed through court. If no guardian can beappointed, the Public Guardian and Trustee or provincial equivalent of that province maybecome the guardian of the minor child’s property.

Beneficiary – Minor with a Trustee – Policy terminates and the proceeds are payable tothe Trustee in trust for minor beneficiary. The trustee can be appointed on the applicationat time of plan establishment, through the applicable beneficiary change form or on alegal document. Provincial legislation governs trustee use of the proceeds. Consult alegal professional for details.

QuebecBeneficiary – Minor without a surviving parent as tutor – Policy terminates and theproceeds are paid to the Ministry of Finance. A dative tutor may be appointed eitherthrough the will of the parents, court order, or written appointment by the parents to thePublic Curateur.

Beneficiary – Minor with a surviving parent as tutor – Policy terminates and theproceeds are payable to the tutor (parent) for the minor child

Financially dependent disabled adult son or daughter named as beneficiary forregistered plans

Policy terminates and the proceeds are payable to the beneficiary. If the beneficiary islegally incapable, the proceeds would be payable to the guardian (in Quebec: tutor orcurator). Proceeds may negatively impact provincial disability income supportentitlements. Disability income support varies with provincial legislation. Consult a legalprofessional for details.

May qualify for special tax treatment as a “refund of premiums”.

Caution: Tax implications will vary by individual circumstances and provincial legislation.

The information contained herein is for information purposes only, and pertains only topotential Canadian tax and legal implications surrounding segregated funds. It is notintended to provide legal, accounting, taxation or other professional advice to advisorsor to their clients, whose situations may involve results not discussed here. We cautionthat no one should act upon this information without a thorough examination of the legaland tax situation with their own professional advisors, taking into account their ownunique circumstances.

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Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies, is the sole issuer of the individual variable annuity contract providingfor investment in SunWise Elite segregated funds. A description of the key features of the applicable individual variable annuity contract is contained in theInformation Folder. SUBJECT TO ANY APPLICABLE DEATH AND MATURITY GUARANTEES, ANY AMOUNT THAT IS ALLOCATED TO A SEGREGATEDFUND IS INVESTED AT THE RISK OF THE CONTRACT HOLDER AND MAY INCREASE OR DECREASE IN VALUE ACCORDING TO FLUCTUATIONS INTHE MARKET VALUE. ®CI Investments and the CI Investments design are registered trademarks of CI Investments Inc. ®SunWise is a registered trademark of Sun Life Assurance Company of Canada. †AIM, the chevron logo and all associated trademarks are trademarks of AIM Management Group Inc., used under licence.*TRIMARK and all associated trademarks are trademarks of AIM Funds Management Inc. ®Fidelity Investments and the Fidelity design are registered trademarks ofFMR Corp. ®RBC Asset Management is a registered trademark of Royal Bank of Canada. TMTD Asset Management is a trademark of The Toronto-Dominion Bank,used under licence.

SW ESTATE PLNG-01/09E

Sun Life Assurance Company of Canada

227 King Street SouthP.O. Box 1601 STN WaterlooWaterloo, Ontario N2J 4C5

2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I www.ci.com

Head Office / Toronto416-364-1145 1-800-268-9374

Calgary 403-205-43961-800-776-9027

Montreal 514-875-00901-800-268-1602

Vancouver 604-681-33461-800-665-6994

Client Services English: 1-800-563-5181French: 1-800-668-3528


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