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Introduction to Heritage

Heritage Education Funds

Table of Contents

Description..............................................................................................................................1 Module Outline.......................................................................................................................2 Objectiv es ..............................................................................................................................3 About the Organizatio n..........................................................................................................4 Heritage Educatio nal Foundation..........................................................................................5 Scholarship Commit tee..........................................................................................................6 Partners...................................................................................................................................7 Depository..................................................................................................................7 Trustee........................................................................................................................8 Other..........................................................................................................................9 Review Questions ­ 1a..........................................................................................................10 RESP Overview......................................................................................................................11 Grants...................................................................................................................................12 Canada Education Savings Grant ..........................................................................12 Basic CESG...............................................................................................................13 Additional CESG ......................................................................................................14 Canada Learning Bond...........................................................................................15 CLB Eligibility & Payout.............................................................................................16 Review Questions ­ 1b..........................................................................................................17 Points to Remember.............................................................................................................18 Answer Key - 1 ......................................................................................................................21 Thank You.............................................................................................................................22

I ntroduction t o Herit age © Herit age Educat ion Funds, I nc

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Description

Module Description: This module describes the organizatio nal structure of Heritage, including key partners and roles. A general overview of RESPs and government incentives is also covered. Intended Audience: New sales representativ es and Herit age employees Pre-requisit es: None Approx imate Time Required: 20-30 minutes Resources: Additional informatio n can be found on the Heritage websit e ­ www.Herit ageRESP.com

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Module Outline

We will begin by introducing the objectives for this module. The first topic will be the Herit age organization. This will be followed by a short quiz to help you test your command of the information covered. Next we w ill discuss the basics of registered education savings plans and the government incentives related to them. Again, a brie f quiz will follow. Finally, we summarize some of the key points of this module.

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Objectives

Our primary objective for this module is to prepare new sales representatives for the product ex am they w ill need to take in order to become licensed to sell Herit age Plans. Additionally , this can also be useful to new non-sale s emplo yees. By the end of this training, you should be able to: · · · Describe how Heritage is structured Identify key partners and their roles Describe RESP basics and available government incentiv es ­ more detaile d information on RESPs and incentives are covered in the RESPDAC Sales Representative Proficiency Course

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About the Organization

The Herit age organizatio n is comprised of two separate, but related, entit ies: the Heritage Educational Foundatio n (the Foundation) and Heritage Educatio n Funds, Inc. The Foundation is a non-profit corporation, w it hout share capital, incorporated under the Canada Corporatio ns Act. It is responsible for the Heritage Plans and Impression Plan, and coordinating functions provided by the Plan partners. Heritage Educatio n Funds, Inc. is the distributor, offering enrollm ent in the Plans through it s network of dedicated sale s representativ es. Heritage Educatio n Funds, Inc. began in 1965 as the Canadian American Financial Corp (Canada) Limit ed. In 1988, the Herit age Scholarship Trust Foundatio n and the Herit age Plans were launched and became one of the fastest-growing, pooled RESP in Canada.

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Heritage Educational Foundation

The Educatio nal Foundation is an independent, non-profit corporatio n incorporated in 1986. The Foundation administers and is responible for both the Heritage and Impressio n Plans. The sole purpose of the foundatio n is to: "encourage and promote the advancement of higher education by the provision of educational assistance payments and other assistance to young Canadians w ho attend post-secondary institutions".

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Scholarship Committee

The Scholarship Committee is established by the Board of Directors of the Foundation to make decisions concerning eligibility, recognized instit utio ns and make decisions in special situatio ns. The committee's responsibilit ies include deciding: · · · · Whether a post-secondary institution qualifies as a recognized instit utio n under the plan; Whether a beneficiary qualifie s to receive scholarship awards; Whether advancement or deferral of entit le ment will be made; and What the scholarship awards per Herit age unit w ill be each year.

The decision of the commit tee in these matters is final.

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Partners

Depository

There are a number of partners involved in administering the Plans, starting wit h the deposit ory. The depository is a functio n performed by a chartered bank. For Heritage Plans, the deposit ory is The Bank of Nova Scotia. The role of the depository is to: · · · · Receive contributions from subscribers Deduct membership fees and insurance premiums Remit the balance, including any interest earned, to the Trustee Receive savings (contributio ns le ss any applicable fees) upon maturity of the plan, on behalf of the subscriber Essentially , the depository is the intermediary between the plan Trustee, the subscriber and the distributor (Herit age Education Funds, Inc.).

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Trustee

RBC Dex ia Investor Services Trust acts as the Trustee for Herit age Plans. As such, they are responsible for holding all plan investments in trust for the Foundation ­ and, ultimately, the subscribers and beneficiaries. The Trustee also oversees the administratio n of the scholarship fund and self-determined accounts. They ensure payments are made to subscribers and beneficiaries, and govern the amount of money paid to beneficiaries in accordance with the terms of the Plan. Finally, if for any reason the Foundation becomes unable to administer the Plan, the Trustee would assume all duties and powers of the Foundatio n. Any contributions made by subscribers and interest earned are protected to the extent of the Trust Laws in Canada.

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Other

The remaining partners include: · · · · Scotia Cassels and CIBC Wood Gundy for investments Sun Life Assurance provides the life & disability insurance available to subscribers KPM G are the Plan audit ors; and Lang Michener is the Foundatio ns legal counsel

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Review Questions ­ 1a

1. Complete the sent ence below by circling the correct option in the brackets: Heritage began in ( 1975, 1965, 1988, 1960 ) as the Canadian American Financial Corp (Canada) Lim it ed.

2. Match the Plan Partner to their role.

Partner

1. The Bank of Nova Scotia 2. Scotia Cassels Investment Counsel 3. Heritage Educatio n Funds, Inc. 4. RBC Dex ia Investor Services Trust 5. Sun Life Assurance Company of Canada

Role

a) Trustee b) Insurance Provider c) Depository d) Distributor e) Portfolio Advisor

3. Indicate whether the follow ing statement is true or false. One of the responsibilit ies of the Scholarship Committee is to determine the payout value of a unit each year. T F

4. Which Partner role receives cont ribution s and deducts membership fees & insurance premiums? a) Distributor b) Trustee c) Investment Partner d) Depository

5. Indicate whether the follow ing statement is true or false. The Herit age Plans were first distributed as the Herit age Scholarship Trust Plans in 1982. T F

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RESP Overview

Registered Education Savings Plans (RESPs) are tax -sheltered investment plans, designed to help parents prepare for their children's post-secondary education. Although contributio ns to RESPs are not tax deductible, the income earned on investments is tax sheltered until the tim e of withdrawal. These funds are paid out to a qualified student, who usually has no tax able income ­ therefore, the earnings will attract little or no tax . RESPs are registered w it h the Canada Revenue Agency. As of M arch 2007, the maximum lifetim e contribution lim it is $50,000 per child. This is regardle ss of w hether there is one or more RESP's in the child's name. At that tim e, the government also moved any annual contributio n limit . All RESPs must be fully collapsed (paid out) by Dec 31 st of the 35 th year from plan enrollment. Various government grants are also available, to encourage subscribers to save for their children's post-secondary educatio n.

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Grants

Canada Education Savings Grant

Introduced in 1998, the Canada Education Savings Grant was set up to encourage parents save for their child's educatio n after high school. It is administered by the HRSDC ­ Human Resources and Skills Develo pment Canada. The CESG is available to all children in Canada, regardless of family income. Children are eligible for the grant beginning at the later of their year of birth, year of Canadian residency or 1998 ­ and may continue to benefit up to the age of 17. The max im um grant any child may receiv e is $7,200.

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Basic CESG

The basic CESG is available to all children, regardle ss of family income. For each eligible year, grant room accumulates for a child until the end of the year in w hich he/she turns 17. From 1998 to 2006, $400 w as the annual grant room available for each eligible child. In 2007, this increased to $500. The grant is paid out as a percentage of contributions into the plan ­ 20% on the first $2,500 of annual contributions, up to a max imum of $500 grant. Any unused grant room is carrie d forward for possible use in future years, up to another $500 of grant. For example, an eligible child has $1000 of grant room available - $500 for the current year and $500 from a previous year that was not used. If the Subscriber contributes $5,000 for the year, the child's RESP will receiv e $1,000 of grant - $500 for the current year and $500 of the previously unused grant room.

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Additional CESG

There is also an addit ional CESG benefit available to child of familie s with middle -to-low net family incomes. Child may be entit led to addit ional 10-20% of grant on the first $500 of annual contribution ­ result ing in an extra $50-100 of grant receiv ed in a given year. The net family income lim it s are adjusted annually by the Canada Revenue Agency. This slide shows the limit s for 2008. Unlike the basic CESG, the additio nal benefit cannot be carrie d forward. It must be used in the eligible year or it is forfeit . This added benefit does not change the limit of $7,200 per child. It just allows middle -tolow income familie s to earn the grant faster than they otherwise would be able to do so.

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Canada Learning Bond

The Canada Learning Bond is a Government of Canada incentiv e was introduced in 2004. It was init iated to help lower-income families start saving early for their child's postsecondary education. It is put directly into an RESP in which the child is named as the beneficiary. Unlike the CESG, the Canada Learning Bond is not dependent on contributions. It requires only that an RESP be opened in the child's name. Additio nally, regardless of the number of RESPs opened for a child, only ONE may be receive money under the Canada Learning Bond program. The max im um CLB available to a child is $2,000.

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CLB Eligibility & Payout

To be eligible to receive the Canada Learning Bond: · · The child must be born in 2004 or later; and The primary caregiver must be eligible for the Natio nal Child Benefit Supplement.

For familie s who qualify, the Government w ill add to a child's RESP by making a first payment of $500. An addit ional $25 may be paid with the first $500 bond to help cover the cost of opening an RESP. For each additio nal year of eligibilit y, the child is entit led to an additio nal $100 a year up to the year the child turns 15. The max im um CLB available to a child is $2,000.

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Review Questions ­ 1b

6. What is the lifet ime RESP contribution limit per ch ild? ____________________________

7. Indicate whether the follow ing statement is true or false. The Canada Learning Bond is available to children born in 2001 or later, w hose families qualify for the National Child Benefit Supplement. T F

8. Complete the sent ence below by circling the correct option in the brackets: A subscriber w it h a high net family income contributes $2,000 to their child's RESP in the current year. The basic Canada Educatio n Savings Grant their child is entit led to for the year is ( $200, $400, $500, $600 ).

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Points to Remember

Just to summarize some of the key points covered in this module... Heritage is comprised of two distinct entit ies: Heritage Educatio nal Foundation is a non-profit corporation, responsible for the Herit age and Impression Plans. Heritage Educatio n Funds, Inc. is the distributor of the Plans ­ responsible for sales and marketing. The scholarship commit tee is established by the Foundatio n's Board of Directors and makes decisions concerning eligibility, recognized instit utions and scholarship awards. There are a number of partners involved in administering the Plans. Two primary ones are the depository and the trustee. As the depository, The Bank of Nova Scotia is the intermediary between the plan Trustee, the subscriber and the distributor (Herit age Education Funds, Inc.) ­ receiving contributio ns, deducting membership fees & insurance premiums and remit ting the balance to the trustee.

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RBC Dex ia Investor Services Trust acts as the Trustee for Herit age Plans. As such, they are responsible for holding all plan investments in trust for the Foundation ­ and, ultimately, the subscribers and beneficiaries.

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RESPs are tax -shelt ered investment plans, designed to help parents prepare for their children's post-secondary educatio n. Contributions are not tax deductible, but the income earned on investments is tax shelt ered until the time of wit hdrawal. The max im um lifetime contributio n limit is currently $50,000 per child. Vario us government grants are also available . The Canada Educatio n Savings Grant currently offers 20% on the first $2,500 of contributio ns in the year ­ resulting in a grant of up to $500. An addit ional grant of $50100 is available for moderate-to-low income familie s. The lifetime max imum grant is $7,200 per child. The Canada Learning Bond is available to children born in 2004 or later, w hose families are eligible to receiv e the Natio nal Child Benefit Supple ment (have a net annual income below $37,178). A bond of $500 is granted upon set up of an RESP and $100/yr to age 15 (as long as the family continues to qualify). The max im um lifetime amount is $2,000 per eligible child.

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Answer Key - 1

Quest ion 1 2 Answer 1965 1­C 2­E 3­D 4­A 5­B 3 4 5 6 7 8 True Depository False $50,000 False $400 Scholarship Commit tee Partners - Deposit ory About the Organizatio n RESP Overview Grants ­ Canada Learning Bond Basic CESG Material Referen ce About the Organizatio n About the Organizatio n and Partners

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Thank You

This concludes the Introductio n to Herit age training module ­ one of the core product training module s for new sale s representativ es and emplo yees. We hope you found this useful in learning about the organization and some basic RESP informatio n. If you would like to provide any feedback on this module , please feel free to email your comments or suggestio ns to Sale [email protected] ageresp.com. Thanks for participating!

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