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Estate Planning and Contract Structuring with SunWise Essential Series 2

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

Table of Contents

Estate Planning and Contract Structuring with SunWise Essential Series 2 . . . 1

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

Non-Registered Policies

Individually Owned, Single Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Individually Owned, Joint Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Corporately Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Joint Tenants with Rights of Survivorship (JTWROS), Single Annuitant . . . 6

Joint Tenants in Common, Single Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . 7

Joint Tenants With Rights of Survivorship (JTWROS), Joint Annuitants . . . 8

Joint Tenants in Common, Joint Annuitants . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Quebec - Joint Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Reference Notes for Non-Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . 10

Registered Policies

Tax-Free Savings Account (TFSA) Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Registered Retirement Savings Plan (RRSP) Policy . . . . . . . . . . . . . . . . . . . 12

Registered Retirement Income Fund (RRIF) Policy . . . . . . . . . . . . . . . . . . . . 13

Reference Notes for Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1

An estate plan represents the blueprint for your

client’s financial life and your client’s family’s

financial future. Proper estate planning takes far

less time and effort than most people imagine,

and can provide tremendous peace of mind.

Estate planning is a process that helps investors accumulate and conserve assets. It addresses their legal and financial concerns while taking into account their goals and tax considerations. Estate planning also takes advantage of existing laws and funding vehicles to save on tax payments and help manage property in an efficient and profitable manner during the investor’s lifetime.

As the baby-boomer generation ages, more and more investors are realizing the importance of creating an estate plan that ensures their loved ones are provided for in the best way possible. Estate plans are not all the same as each will have different nuances and goals driven by the unique motivations and priorities of the client. Thus, each client’s estate planning should be approached differently to suit the expectations of the client.

To meet the growing needs of investors to put more emphasis on estate planning, Sun Life Assurance Company of Canada and CI Investments offer tax- efficient and estate planning friendly products like segregated funds. Segregated funds are more than mutual funds with guarantees. In actuality, they are insurance contracts that generally are invested in and provide the potential return of underlying mutual

funds. But equally important, they are an excellent estate planning tool. The features of segregated funds as an insurance contract should not be overlooked as they have the potential to provide a different outcome, independent of the will, upon the annuitant’s death.On the following pages you will find a wide range of the more common ways to structure a segregated fund contract for different registration types. Each example will demonstrate the effect the various owner(s), annuitant(s) and beneficiary(ies) will have on the continuation of the contract and potential tax implications upon the death of any of the parties involved. Use these examples to help ensure the outcome matches your client’s expectations when setting up a segregated fund contract.

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

Estate Planning and Contract Structuring with SunWise Essential Series 2

2

ANNUITANT

Who is the annuitant?The annuitant of a segregated funds policy is the person upon whose life the contract is based. Upon the death of the annuitant, the death benefit guarantee becomes payable.

Note: For corporately owned policies, the annuitant must be a living person. In our experience, the annuitant is usually a key person to the corporation such as a primary shareholder, founder or president.

Caution! It is not appropriate to name the same person as both beneficiary and annuitant, as the death benefit proceeds are paid upon the death of the annuitant.

Can I have more than one annuitant?Yes, the SunWise Essential Series 2 is designed to allow for two annuitants to be named under a contract (for non-registered policies). Upon the death of the annuitant (or the last surviving annuitant for policies with a joint annuitant structure), the contract terminates and the death benefit becomes payable.

If I had originally only selected one annuitant on my contract, can I add a second annuitant to my policy at a later point in time?Yes, a joint annuitant can be added to a policy at any time prior to the death of the annuitant. After the addition of the new joint annuitant, the Death Benefit Proceeds will become payable only upon the death of the last surviving annuitant.

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

Caution! For non-registered policies, where the owner is different from the annuitant, upon the death of the annuitant, the contract is terminated and the contract benefits become payable to the beneficiary(ies). Also, upon the death of the owner, if no successor owner has been named, ownership of the contract will pass to the owner’s estate. In some circumstances a probated will may be required to determine ownership of the contract.

OWNERSHIP STRUCTURE

How 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, the simplest contract structure that facilitates this is a single owner, single annuitant contract with the client as owner and annuitant, and the spouse as beneficiary.

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

Caution! For Joint Tenants in Common policies with joint annuitants (same people as the joint owners), upon the death of one of the owners, the ownership of the share belonging to the deceased becomes part of the deceased’s estate, unless a successor owner has been named for that share.

Tips for a contract structure that meets your clients’ needsBelow are some quick pointers that can add value to you and to your clients and that will help you meet your client’s objectives.

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Note: In Quebec, Joint Owners with Rights of Survivorship contracts are not permitted. All contracts held jointly in Quebec are held as “Joint Tenants in Common”. To ensure the contract continues with the surviving owner as sole owner on “Joint Tenants in Common” contracts, each owner can designate the other owner as subrogated policyholder of their share. In Quebec, on the death of one of the joint owners their portion goes through the estate of the deceased owner unless a subrogated policyholder is named for that share.

SUCCESSOR OWNER (Subrogated Policyholder in Quebec)

What is a successor owner?A successor owner is a person appointed by an owner to take their ownership interest in the contract on the death of the owner if the contract continues. If a successor owner has been named on the policy, the policy ownership will automatically pass to the successor owner on the death of the owner without passing through the estate.

For example, if the owner is not the sole annuitant, the contract will continue on the owner’s death and their interest passes to the successor owner and not to their estate.

In Quebec, the successor owner is called the subrogated policyholder. For a jointly owned contract where Joe and Susie are the owners, a contract set up with Joe named subrogated policyholder for Susie and Susie named subrogated policyholder for Joe allows for assets to bypass the estate upon death. Upon the death of one of the owners, the policy is owned entirely by the surviving owner.

For a Tax-Free Savings Account (TFSA), full ownership rights under the contract can only be passed to the surviving spouse, if the surviving spouse is named as the sole primary beneficiary. Only the spouse can be the successor policyholder under a TFSA plan type.

How can I name a successor owner?A successor owner should be named at the time of the application. However a successor owner may be changed or added at any time with a written request signed by the policy owner.

BENEFICIARIES

A beneficiary designation is a very important benefit of a segregated fund contract as an estate planning tool. When a beneficiary designation is in effect, death benefit proceeds can flow directly to the named beneficiary(ies) on the death of the last surviving annuitant. A beneficiary designation in favour of certain family members of the annuitant (in Quebec the owner) may provide creditor protection for the owner of the contract in some circumstances. This also applies to an irrevocable designation. Clients should consult their own legal professional for more details.

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

Can a person acting with a Power of Attorney (POA) over the contract owner’s financial affairs appoint a beneficiary?A person acting under a Power of Attorney (POA) cannot designate a beneficiary. In some circumstances, in conjunction with the directions of the attorney, the beneficiary designation may be carried forward to a new contract from an existing contract if the proceeds from that existing contract were used to fund the new contract.

Can the beneficiary of my segregated funds policy be different from the beneficiary of my will?Yes. Generally beneficiary designations for insurance contracts are made outside of the will in the segregated fund application or subsequent beneficiary change form. An insurance beneficiary designation can be made in your will, however you must be careful on how it is worded to ensure its effectiveness. The last beneficiary designation you make for the contract will apply, regardless of whether or not it is specified in the will. The death settlement of the policy will flow outside of the estate when there is a valid beneficiary designation in effect.

Caution! For joint non-registered policies with one annuitant, it is advisable that the joint owner (who is not the annuitant) be named as beneficiary, in order for the death benefit to be paid out to the joint owner upon the death of the annuitant.

4

Can I name a minor as beneficiary for my segregated funds policy? In all provinces other than Quebec, if a minor or a legally incompetent person is named as the policy beneficiary, it is recommended that a trustee be named for the beneficiary. The application or beneficiary change forms provide an area to name the trustee.

If a minor beneficiary is named without a trustee, the estate settlement payment may be delayed until a financial trustee is appointed.

In Quebec, if a minor is named as beneficiary, the payment of the death benefit will be made to their surviving parent or dative tutor. If there is no surviving parent, a dative tutor appointment will be made either through the will of the parents, court order, or based on a previous written appointment by the parents to the Public Curator. A Tutor is the legal guardian of a minor and of the minor’s property. A dative tutor is a person that may hold the position of tutor to the child’s person or their property, or both.

ExamplePolicy Owner: JoeAnnuitant: JoeBeneficiary: Minor child without a trustee

A Guardian can be appointed through court. If no Guardian is appointed, the Public Guardian and Trustee, or provincial equivalent may 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 the policy cannot make certain changes to the contract without the consent of the irrevocable beneficiary (like changing the beneficiary designation, making withdrawals, changing guarantee options, etc., as these changes may potentially affect the contract negatively). There is seldom a good reason to name an irrevocable beneficiary, and it should only be done after a careful consideration of the consequences.

In Quebec, the married/civil union spouse is deemed to be by law irrevocable unless the client specifies otherwise. This does not apply to common-law spouses.

Caution! It is not advisable to have a minor as an irrevocable beneficiary, as appointment of a beneficiary as irrevocable gives the named beneficiary certain control over the policy. Given that a minor irrevocable beneficiary cannot consent to any change to the policy, the policy is frozen until the minor reaches the age of majority, unless a Guardian of Property is appointed by the courts.

Can my spouse continue the benefits of my registered segregated funds policy upon my death?Spousal continuance is available for RRSP or RRIF policies. To ensure the continuation of the benefits (inclusive of GLWB benefits), the spouse must be named as the sole primary beneficiary. To continue the benefits of an RRSP, a new contract must be issued for the spouse.

Corporate account beneficiaries

Caution! When establishing a corporate policy, it is advisable to designate the corporation as beneficiary. This way, should a disposition occur due to the annuitant(s)’s death, the death benefit would be payable to the corporation. In doing so, the corporation would have the assets required to pay any taxes owing. In the event that the death benefit is paid to someone other than the corporation, the entire proceeds could be fully taxable in the hands of the beneficiary as an employee benefit, shareholder benefit or taxable death benefit.

Contingent beneficiaries

What happens if the beneficiary predeceases the annuitant?If the beneficiary(ies) predecease(s) the annuitant, or the last surviving annuitant in the case of joint annuitants, a contingent beneficiary for that beneficiary’s share, if still alive at the death of the annuitant, will receive that beneficiary’s share of the death benefit. If no contingent beneficiary(ies) for that share is named or is alive at the time, that share shall be payable to the owner or if the owner was the annuitant, to the estate of the deceased owner.

5 EstatePlanningGuide

Non-Registered Policy – Individually Owned, Single AnnuitantOwner Annuitant3 Who died? What happens on death?

Tax TreatmentDeath Benefit2

Joe Joe Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). Actual Disposition:TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.Anygainsand/orallocationsinthepolicybetweenJoe’sdateofdeathandthedateofsettlementwillbetaxedtoJoe’sbeneficiary(ies).

SuccessorownershipisnotapplicableastheAnnuitanthaspassedawayandthepolicyisterminated.

Joe Susie(Spouse) Joe ThepolicycontinuesinforcesincetheAnnuitantisstillliving.Nodeathbenefitispayableatthistime.Joe’sestatenowownsthepolicy.

If no successor owner1 is named:ActualDisposition.TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.Anygainsand/orallocationsinthepolicybetweenJoe’sdateofdeathandthedateofsettlementwillbetaxedtoJoe’sestate.

If a successor owner1 is named:IfSusieisnamedassuccessorowner,ownershipwilltransfertoSusie,tax-deferred.Notaxslipswillbeissued.

IfsomeoneotherthanSusie(thespouse)isnamedassuccessorownertherewillbeadeemeddispositionastheaccounttransfersownership.TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.

Joe Susie(Spouse) Susie(Spouse) Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). Actual Disposition:Thepolicyisterminated.TaxslipswillbeissuedtoJoeandcapitalgainsand/orallocationsmustbereportedonhistaxreturn.

Non-Registered Policy – Individually Owned, Joint AnnuitantJoe Joe&Susie

(Spouses)Joe ThepolicycontinuesinforcesinceoneAnnuitantisstillliving.Nodeath

benefitispayableatthistime.ThepolicycontinuesassingleAnnuitant.

Ifnosuccessorowner1hasbeennamed,Joe’sestatenowownstheContract.TheDeathBenefitisnotpayableatthistime.

If no successor owner1 is named:ActualDisposition.TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.Anygainand/orallocationsinthepolicybetweenJoe’sdateofdeathandthedateofsettlementwillbetaxedtoJoe’sestate.

If a successor owner1 is named:IfSusieisnamedassuccessorowner,orinheritsthepolicythroughJoe’swill,ownershipwilltransfertoSusie,tax-deferred.Notaxslipswillbeissued.

IfsomeoneotherthanSusie(thespouse)isnamedassuccessorownertherewillbeadeemeddispositionastheaccounttransfersownership.TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.


Non-Registered Policy – Individually Owned, Joint Annuitant cont’dOwner Annuitant3 Who died? What happens on death?


Joe Ben&Mary(Spouses)

Ben ThepolicycontinuesinforcesinceoneAnnuitantisstillliving.Nodeathbenefitispayableatthistime.Joecontinuestoownthepolicy.

Nodispositionoccurshereastheownerisstillalive.

Joe Joe&Susie(Spouses)

Joe&Susie(Spouse)(concurrentdeath)

Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). Actual Disposition:TaxslipswillbeissuedtoJoeandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn.Anygainsand/orallocationsinthepolicybetweenJoe’sdateofdeathandthedateofsettlementwillbetaxedtothecontractbeneficiary(ies).

Successorownershipisnotapplicablebecausethepolicyisterminated.

Non-Registered Policy – Corporately OwnedXYZ Corporation

Joe Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies)2. Actual Disposition:TaxslipswillbeissuedinthenameofXYZCorporation.ThegainistaxabletoXYZCorporationandisnoteligibleforSmallBusinessTaxRate.

XYZ Corporation

Joe&Susie(Spouses)

Joe ThepolicycontinuesinforcesinceoneAnnuitantisstillliving.Nodeathbenefitispayableatthistime.ThepolicycontinuesassingleAnnuitant.

Nodispositionoccurs.

Non-Registered Policy – JTWROS Owners, Single Annuitant (For Contracts established in all provinces except Quebec)Joe & Susie (Spouses)

Joe Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies).

Note: Ifabeneficiary(ies)otherthanSusiehasbeennamed,Susiehasnoclaimtothemoneyeventhoughsheisthejointowner.

Actual Disposition:TaxslipswillbeissuedinthenameofbothJoeandSusie.Joe’sgainsand/orallocationswillbetaxableonhisfinaltaxreturnandSusie’sgainsand/orallocationswillbetaxableonhertaxreturn4.Ataxprofessionalshouldbeconsultedasclientswouldneedtotracktheirfinancialcontributionsandeachpersonwouldberesponsibleforthetaxationofgainontheirproportionategrowthintheaccount.

Joe & Susie (Spouses)

Ben Ben Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies).

Note:Ifabeneficiary(ies)otherthanSusieand/orJoehasbeennamed,Susieand/orJoehavenoclaimtothemoneyeventhoughtheyarethejointowners.

Actual Disposition:TaxslipswillbeissuedinthenamesofbothJoeandSusieforanygainand/orallocationsinthepolicyuptonotificationofBen’sdeath4.Anygainand/orallocationsinthepolicybetweennotificationofBen’sdeathandthedateofsettlementwillbetaxedtothecontractbeneficiary(ies).


Susie(Spouse) Joe ThepolicycontinuesinforcesincetheAnnuitantisstillliving.Nodeathbenefitispayableatthistime.Susieisnowthesoleownerofthepolicy.

Nodispositionoccurs.


Non-Registered Policy – JTIC Owners, Single AnnuitantOwner Annuitant3 Who died? What happens on death?



Joe Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies).

Note:Ifabeneficiary(ies)otherthanSusiehasbeennamed,Susiehasnoclaimtothemoneyeventhoughsheisthejointowner.

Actual Disposition:TaxslipswillbeissuedinthenameofbothJoeandSusie.Joe’sgainsand/orallocationswillbetaxableonhisfinaltaxreturn4andSusie’sgainsand/orallocationswillbetaxableonhertaxreturn4.Ataxprofessionalshouldbeconsultedasclientswouldneedtotracktheirfinancialcontributionsandeachpersonwouldberesponsibleforthetaxationofgainontheirproportionategrowthintheaccount.Anygainand/orallocationsinthepolicybetweenthedateofnotificationofJoe’sdeathandthedateoftheestatesettlementshouldbetaxedinthenameofthecontractbeneficiary(ies).


Ben Ben Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies).

Note: Ifabeneficiary(ies)otherthantheownershavebeennamed,theownershavenoclaimtothemoneyeventhoughtheyarethejointowners.

Actual Disposition:TaxslipswillbeissuedinthenamesofbothJoeandSusieforanygainand/orallocationsinthepolicyuptonotificationofBen’sdeath.Ataxprofessionalshouldbeconsultedasanygainand/orallocationsinthepolicybetweenthedateofnotificationofBen’sdeathandthedateofsettlementshouldbetaxedinthenameofthecontractbeneficiary(ies).


Susie(Spouse) Joe ThepolicycontinuesinforcesincetheAnnuitantisstillliving.Nodeathbenefitispayableatthistime.Providednosuccessorowner1hasbeennamedforJoe’sportion,thepolicyisnowheldjointlybySusieandJoe’sestate.

Ifnosuccessorowner1hasbeennamed,Joe’sestatenowownshisportionoftheContract.

If no successor owner1 is named:ActualDisposition.Joe’sportiongoestosomeoneotherthanSusie(thespouse).TherewillbeadeemeddispositionofJoe’sportionatthetimeofdeathandgainsand/orallocationswillbetaxableonhisfinalreturn.TherewillnotbeadeemeddispositionofSusie’sportion.TaxslipswillbeissuedinthenameofbothSusieandJoe.

If a successor owner1 is named:IfSusieisnamedasJoe’ssuccessorownerorinheritsJoe’sportionofthepolicythroughthewill,ownershipofJoe’sportionwilltransfertoSusie,tax-deferred.Notaxslipwillbeissued.

IfsomeoneotherthanSusie(thespouse)isnamedassuccessorownertherewillbeadeemeddispositionofJoe’sportionondateofdeathasittransfersownership.TaxslipswillbeissuedtoJoeandSusieandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn4.


Non-Registered Policy – JTWROS Owners, Joint Annuitants (For Contracts established in all provinces except Quebec)Owner Annuitant3 Who died? What happens on death?



Joe&Susie(Spouses)

Joe ThepolicycontinuesinforcesinceoneAnnuitantisstillliving.Survivingownerinheritsthepolicy.

Nodispositionoccurs.Note:Ifthejointownersarenotspouses,thentherewouldbeadeemeddispositiononthedeathofoneoftheannuitantsasthiswouldbeconsideredatransferofownership.

Non-Registered Policy – JTIC Owners, Joint Annuitants Joe & Susie (Spouses)

Joe&Susie(Spouses)

Joe ThepolicycontinuesinforcesinceoneAnnuitantisstillliving.Providednosuccessorowner1hasbeennamedforJoe’sportion,thepolicyisnowheldjointlybySusieandJoe’sestate.

If no successor owner1 is named:ActualDisposition.TherewillbeadeemeddispositionofJoe’sportionatthetimeofdeathandgainsand/orallocationswillbetaxableonhisfinaltaxreturn4.TherewillnotbeadeemeddispositionofSusie’sportion.TaxslipswillbeissuedinthenameofbothSusieandJoe4.

If a successor owner1 is named:IfSusieisnamedasJoe’ssuccessorownerorinheritsthepolicythroughJoe’swill,ownershipofJoe’sportionwilltransfertoSusie,tax-deferred.Notaxslipswillbeissued.

IfsomeoneotherthanSusie(thespouse)isnamedassuccessorownertherewillbeadeemeddispositionofJoe’sportionondateofdeathasittransfersownership.TaxslipswillbeissuedtoJoeandSusieandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn4.

Non-Registered Policy – Quebec – Joint OwnershipJoe & Susie (Spouses)

Joe Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). Actual Disposition:TaxslipswillbeissuedinthenameofbothJoeandSusie.Joe’sgainsand/orallocationsaretaxableonhisfinaltaxreturnandSusie’sgainsand/orallocationsaretaxableonhertaxreturn4.Ataxprofessionalshouldbeconsultedasclientswouldneedtotracktheirfinancialcontributionsandeachpersonwouldberesponsibleforthetaxationofgainontheirproportionategrowthintheaccount.


Non-Registered Policy – Quebec – Joint Ownership cont’dOwner Annuitant3 Who died? What happens on death?



Joe&Susie(Spouses)

Joe IfJoeandSusiewantthesurvivingspousetoownthecontractintheeventofthedeathofoneofthem,eachshouldnametheotherassubrogatedowner1fortheirshare.Thepolicycontinues,andnodeathbenefitispayableatthistime,sinceoneoftheAnnuitantsisstillliving.

If a subrogated owner1 is named:ThesubrogatedowneracquiresJoe’sportionofthepolicy.

If no subrogated owner1 is named:Joe’sportionofthepolicybecomesthepropertyofJoe’sestateuntiltheexecutortransfersownershiptotheestatebeneficiary(ies).

If no subrogated owner1 is named:Joe’sportiongoestosomeoneotherthanSusie(thespouse).TaxslipswillbeissuedforbothJoeandSusie.Joe’sportionwillbedeemedadispositionatthetimeofdeathandgainsand/orallocationswillbetaxableonhisfinalreturn.Susie’sportionwillnotbedeemedadisposition.TaxslipswillbeissuedinthenameofbothSusieandJoe.

If a subrogated owner1 is named:IfSusieisnamedassubrogatedowner,eitherthroughtheapplicationorthroughthewill,ownershipofJoe’sportionwilltransfertoSusie,tax-deferred.Notaxslipswillbeissued.

IfsomeoneotherthanSusie(thespouse)isnamedassubrogatedownertherewillbeadeemeddispositionofJoe’sportionondateofdeathasittransfersownership.TaxslipswillbeissuedtoJoeandSusieandanygainsand/orallocationsuptothedateofdeathmustbereportedonhisfinaltaxreturn4.


Joe&Susie(Spouses)

Susie IfJoeandSusiewantthesurvivingspousetoownthecontractintheeventofthedeathofoneofthem,eachshouldnametheotherassubrogatedowner1fortheirshare.Thepolicycontinues,andnodeathbenefitispayableatthistimesinceoneoftheAnnuitantsisstillliving.

If a subrogated owner1 is named:ThesubrogatedowneracquiresSusie’sportionofthepolicy.

If no subrogated owner1 is named:Susie’sportionofthepolicybecomesthepropertyofSusie’sestateuntiltheexecutortransfersownershiptotheestatebeneficiary(ies).JoeandSusie’sestatewilldictatethetermsandconditionsoftheaccountuntilJoeandthebeneficiary(ies)ofSusie’sestateterminatetheaccount.

If no subrogated owner1 is named:ActualDisposition.TaxslipswillbeissuedforbothJoeandSusie.Susie’sportionwillbedeemedadispositionandgainsand/orallocationsmaybetaxableonherfinalreturn.Joe’sportionwillnotbedeemedadisposition4.

If a subrogated owner1 is named:IfJoeisnamedasSusie’ssubrogatedowner,ownershipofSusie’sportionwilltransfertoJoe,tax-deferred.

IfthesubrogatedownernamedissomeoneotherthanJoetherewillbeadeemeddispositiononSusie’sportionasittransfersownership4.


Joe&Susie(Spouses)

Joe IfJoeandSusiewantthesurvivingspousetoownthecontractintheeventofthedeathofoneofthem,eachshouldnametheotherassubrogatedowner1fortheirshare.ThepolicycontinuesinforcesinceoneAnnuitantisstillliving,nodeathbenefitispayableatthistime.

If no subrogated owner1 is named:Joe’sportionofthepolicybecomesthepropertyofJoe’sestateuntiltheexecutortransfersownershiptotheestatebeneficiary(ies).SusieandJoe’sestatewilldictatethetermsandconditionsoftheaccountuntilSusieandthebeneficiary(ies)ofJoe’sestateterminatetheaccount.

If a subrogated owner1 is named:ThesubrogatedowneraquiresJoe’sportionofthepolicy.

If no subrogated owner1 is named:TaxslipswillbeissuedforbothJoeandSusie.Joe’sportionwillbedeemedadispositionandgainsand/orallocationsmaybetaxableonhisfinalreturn.Susie’sportionwillnotbedeemedadisposition4.

If a subrogated owner1 is named:IfSusieisnamedasJoe’ssubrogatedowner,ownershipofJoe’sportionwilltransfertoSusie,tax-deferred.

IfthesubrogatedownernamedissomeoneotherthanSusietherewillbeadeemeddispositiononJoe’sportionasittransfersownership4.


Reference Notes for Non-Registered Plans1 SuccessorOwneralsooftenreferredtoasContingentOwner.InQuebec,aSuccessorOwner

isreferredtoasSubrogatedOwner.

2 Beneficiarydesignationguidelines:

yOwners, successorownersand thosewho inheritownershipof thepolicyalwayshavethe right tonameanewbeneficiary(ies) (once theybecomeowners),exceptwhere thebeneficiary(ies)hasbeennamedirrevocably,inwhichcasewrittenconsentisrequiredfromtheirrevocablebeneficiary(ies).

yIftheannuitantdiesandthereisnosurvivingbeneficiary,proceedsarepayabletotheowner. yIftheownerandannuitantarethesamepersonandthereisnosurvivingbeneficiary,the

proceedsarepayabletotheowner’sestateandprobatemayapply.

Beneficiariesforacorporately-ownedpolicy

Careshouldbetakenwhenselectingabeneficiaryforacorporately-ownedpolicy.Ifadeathbenefitispaidouttoabeneficiaryotherthanthecorporation,theentireproceedscouldbefullytaxableinthehandsofthebeneficiaryasanemployeebenefit,shareholderbenefitortaxabledeathbenefit.

MinornamedasbeneficiaryAll provinces except Quebec

Beneficiary–MinorwithoutaTrustee–Uponthedeathoftheannuitant,thepolicyterminatesandtheproceedsmaybepaidintotheapplicableprovincialcourtswhereaguardianmaybeappointedforthebeneficiary.Ifnoguardiancanbeappointed,thePublicGuardianandTrusteeorequivalentofthatprovincemaybecometheguardianoftheminorchild’sproperty.

Beneficiary–MinorwithaTrustee–ThepolicyterminatesandtheproceedsarepayabletotheTrusteeintrustfortheminorbeneficiary.Thetrusteecanbeappointedontheapplicationat the time of plan establishment, through the applicable beneficiary change form or on alegal document. Provincial legislation governs trustee use of the proceeds. Consult a legalprofessionalfordetails.

Quebec Beneficiary–Minorwithoutasurvivingparentastutor–Thepolicyterminatesandtheproceedsarepaidtothedativetutorappointed.Adativetutormaybeappointedeitherthroughthewilloftheparents,courtorder,orwrittenappointmentbytheparentstothePublicCurator.

Beneficiary–Minorwithasurvivingparentastutor–Thepolicyterminatesandtheproceedsarepayabletothetutor(parent)fortheminorchild.

Financiallydependentdisabledadultsonordaughternamedasbeneficiary

Ifthebeneficiaryislegallyincapable,theproceedswouldbepayabletothefinancialtrustee(inQuebec:tutororcurator).Proceedsmaynegativelyimpactprovincialdisabilityincomesupportentitlements. Disability income support varies with provincial legislation. Consult a legalprofessionalfordetails.

3 Policycontinuationcanoccurforsingleannuitantpolicieswiththeadditionofanewjointannuitantatanytimepriortothedeathoftheannuitant.Aftertheadditionofthenewjointannuitant,theDeathBenefitProceedswillbecomepayableonlyuponthedeathofthelastsurvivingannuitant.

4 Notethatforjointowners,theIncomeTaxActrequiresthefundstobetaxedinproportiontoeachparty’sactualfinancialcontributiontothefund.Itisuptotheownersofthecontracttotrackeachparty’sfinancialcontributiontothefundandtofilethetaxslipsaccordingly.

Ifthepolicyisterminatedduetothedeathofthelastsurvivingannuitant,thebeneficiarywillreceivethegreateroftheDeathBenefitortheMarketValue.


Tax-Free Savings Account (TFSA) policy

Owner Beneficiary Who died?What happens on death?

Tax TreatmentDeath Benefit

Joe Susie(Spouse) Joe Ifthespouseissolebeneficiary,thespousehasthefollowingoptions:

a)electspousalcontinuanceofthebenefitsandassumetheContractassuccessorplanholder

b)totransfertheDeathBenefittoapersonalTFSA

c)receiveacashpaymentoftheDeathBenefit.

a)IfSusieelectstoassumethepolicyassuccessorplanholder,notaxslipswillbeissuedtoeitherJoeorSusie.

b)IfSusieelectstotransfertheproceedstoherownTFSA(neworalreadyestablished),notaxslipswillbeissuedtoJoe.TheproceedstransferredtoSusie’spolicyduringtherolloverperiodwouldnotbeconsideredacontributioniftheCRAformsarecompletedandfiledwithCRAwithin30daysofthetransfer.

c)IfSusiedecidestotakethedeathbenefitproceedsinalumpsumcashpayment,taxslipsmaybeissuedtoSusieforanyincomeearnedbetweenthedateofdeathandthesettlementdate.

Joe Anyotherbeneficiary(ies)

Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). NotaxslipswillbeissuedtoJoe.

Taxslipswillbebeissuedtothebeneficiary(ies)foranyincomeearnedbetweenthedateofdeathandthesettlementdate.

Joe Susie(Spouse) Susie PolicycontinuesinforcesincetheAnnuitantisstillliving.Ifacontingentbeneficiaryisnamed,thecontingentbeneficiary(ies)becomestheprimarybeneficiary(ies).Ifnocontingentbeneficiaryhasbeennamed,thedeathbenefitentitlementrevertstoJoe’sestateuntilJoenamesanewbeneficiary(ies).

Susie’sdeathdoesnottriggerataxableevent.


Registered Retirement Savings Plan (RRSP) PolicyOwner Beneficiary Who died? What happens on death?


Joe Susie(Spouse) Joe Susiehasthefollowingoptions:

a)Subjecttoouradministrativepoliciesandanyapplicablelegislationineffectatthetime,andthespousemaytransfertheproceeds(atthecurrentmarketvalue)andanyexistingbenefitsintacttoapersonalregisteredplan.

b)TerminatethecontractandtransfertheDeathBenefit(thegreaterofthemarketvalueordeathguarantee)toapersonalregisteredplan.

c)TerminatethecontractandreceiveacashpaymentoftheDeathBenefit(thegreaterofthemarketvalueordeathguarantee).

a,b,c)AtaxslipwillbeissuedtoJoereportingthegreaterofthemarketvalueofthepolicyonthedateofdeathorthedeathguarantee.

a,b)OffsettingtaxslipswillbeissuedtoSusie,forthetaxfreerolloverwhichdeferstaxationoftheproceedstransferred.

c)IfthefinalpaymentexceedstheamountreportedtoJoe,thenthisgrowthwouldbetaxabletoSusie.


Joe ThepolicyterminatesandtheDeathBenefit(greaterofthemarketvalueordeathguarantee)ispayabletothebeneficiary(ies).

AtaxslipwillbeissuedtoJoereportingthegreaterofthemarketvalueofthepolicyonthedateofdeathorthedeathguarantee.Thebeneficiary(ies)willreceiveataxslipforanyincomeearnedbetweenthedateofdeathandthesettlementdate.

Joe Susie(Spouse) Susie ThepolicycontinuesinforcesincetheAnnuitantisstillliving.Ifacontingentbeneficiaryisnamed,thecontingentbeneficiary(ies)becomestheprimarybeneficiary(ies).Ifnocontingentbeneficiary(ies)hasbeennamed,thedeathbenefitentitlementrevertstoJoe’sestateuntilJoenamesanewbeneficiary(ies).



Registered Retirement Income Fund (RRIF) Policy Owner Beneficiary Who died? What happens on death?


Joe Susie(Spouse) Joe Ifthespouseissolebeneficiary,thespousehasthefollowingoptions:

a)ElectspousalcontinuanceofthebenefitsandassumethepolicyassuccessorAnnuitant.

b)TerminatethepolicyandtransfertheeligibleportionofDeathBenefit(thegreaterofthecurrentmarketvalueorthedeathguarantee)toapersonalregisteredplan.Theeligibleportionwouldbetheamountremainingintheplanwhichexceedstheminimumannualpayment.

c)TerminatethepolicyandreceivetheDeathBenefitofthepolicyincash.

a)Susietakesovertheexistingaccountandnotaxslipswillbeissuedasaresultofherbecomingthesuccessorannuitant.AseparatetaxslipwillbeissuedtoJoereportinganyamountspaidtohimpriortodeath.

b)AtaxslipforthefullamountwillbeissuedtoSusie,anoffsettingtaxslipwillbeissuedbythereceivingplanfortheeligibleamounttransferredtoherregisteredplan.AseparatetaxslipwillbeissuedtoJoereportinganyamountspaidtohimpriortodeath.

c)AtaxslipwillbeissuedtoJoereportingthegreaterofthemarketvalueofthepolicyonthedateofdeathorthedeathguaranteeandanypaymentsmadepriortodeath.IfthefinalpaymentuponsettlementexceedstheamountreportedtoJoe,thenthisgrowthwouldbetaxabletoSusie.


Joe Thepolicyterminatesandtheproceedsarepayabletothebeneficiary(ies). AtaxslipwillbeissuedtoJoereportingthegreaterofthemarketvalueofthepolicyonthedateofdeathorthedeathguaranteeandanypaymentsmadepriortodeath.IfthefinalpaymentuponsettlementexceedstheamountreportedtoJoe,thenthisgrowthwouldbetaxabletothebeneficiary(ies).

Joe Susie(Spouse) Susie ThepolicycontinuesinforcesincetheAnnuitantisstillliving.Ifacontingentbeneficiaryisnamed,thecontingentbeneficiary(ies)becomestheprimarybeneficiary(ies).Ifnocontingentbeneficiaryhasbeennamed,thedeathbenefitentitlementrevertstoJoe’sestateuntilJoenamesanewbeneficiary(ies).



Reference Notes for Registered PlansSpousenamedasbeneficiaryforregisteredplans

Whenaspouseisnamedassoleprimarybeneficiaryofaregisteredaccount,theIncomeTaxActprovidesforataxdeferredtransferofassetsfromthedeceasedtothesurvivingspouse.Thisisreferredtoasa“refundofpremiums”forassetstransferredfromanRRSPtoasurvivingspouse.AssetsthataretransferredfromaRRIFtoasurvivingspousearereferredtoasa“designatedbenefit”.ForRRIFaccounts,thesurvivingspousealsohastheoptiontocontinuetheaccountasasuccessorannuitant.Consultataxspecialistformoreinformation.

Minornamedasbeneficiaryforregisteredplans

Theabilityoftheannuitant’slegalrepresentativetohaveallorpartofthedeathbenefitproceedstreatedasa“refundofpremiums”isdependantonthetermsofthedeceased’swill.Theremaybeadditionaltaxplanningopportunitiesavailable(e.g.purchasinganannuityforaminorchild).

All provinces except Quebec

Beneficiary–MinorwithoutaTrustee–Uponthedeathoftheannuitant,thepolicyterminatesandtheproceedsmaybepaidintotheapplicableprovincialcourtsforthebeneficiary.Aguardianmay be appointed through the court. If no guardian can be appointed, the Public GuardianandTrusteeorprovincialequivalentof thatprovincemaybecometheguardianof theminorchild’sproperty.

Beneficiary–MinorwithaTrustee–ThepolicyterminatesandtheproceedsarepayabletotheTrustee in trust forminorbeneficiary.The trusteecanbeappointedon theapplicationat timeofplanestablishment,throughtheapplicablebeneficiarychangeformoronalegaldocument.Provinciallegislationgovernstrusteeuseoftheproceeds.Consultalegalprofessionalfordetails.

Quebec

Beneficiary–Minorwithoutasurvivingparentastutor–ThepolicyterminatesandtheproceedsarepaidtotheMinistryofFinance.Adativetutormaybeappointedeitherthroughthewilloftheparents,courtorder,orwrittenappointmentbytheparentstothePublicCurator.

Beneficiary–Minorwithasurvivingparentastutor–Thepolicyterminatesandtheproceedsarepayabletothetutor(parent)fortheminorchild.

Financiallydependentdisabledadultsonordaughternamedasbeneficiaryforregisteredplans

Ifthebeneficiaryislegallyincapable,theproceedswouldbepayabletotheguardian,financialtrustee, or provincial equivalent (ie, in Quebec: tutor or curator). Proceeds may negativelyimpactprovincialdisabilityincomesupportentitlements.Disabilityincomesupportvarieswithprovinciallegislation.Consultalegalprofessionalfordetails.

Pleasenote thatproceedsmayqualify forspecial tax treatmentasa“refundofpremiums”.Consultataxspecialistformoreinformation.

Caution:Taximplicationswillvarybyindividualcircumstancesandprovinciallegislation.

The information contained herein is for informational purposes only, and pertains only topotentialCanadiantaxandlegalimplicationssurroundingsegregatedfunds.Itisnotintendedtoprovidelegal,accounting,taxationorotherprofessionaladvicetoadvisorsortotheirclients.Wecautionthatnooneshouldactuponthis informationwithoutathoroughexaminationofthelegalandtaxsituationwiththeirownprofessionaladvisors,takingintoaccounttheirownuniquecircumstances.

Sun Life Assurance Company of Canada

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

For more information about the innovative features

and benefits of SunWise Essential Series 2,

please visit www.sunwiseessentialseries.com.

1306-1043_E (10/13)

2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I www.ci.comCalgary403-205-43961-800-776-9027

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

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

FOR ADVISOR USE ONLY

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 providing for investment in SunWise Essential Series 2 segregated funds . A description of the key features of the applicable individual variable annuity contract is contained in the Information Folder . Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value.

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