Give a Little, Get a Lot!

 In Wills and Estates Law

Let’s put aside the first misconception about legacy giving and clarify that you do not have to be wealthy to leave a legacy! Legacy giving can be for everyone.

According to the Charities Directorate of the Canada Revenue Agency (CRA) there are more than 85,000 registered charities in Canada. A list of all registered Canadian charities can be found here. You can narrow your search by province, charity type and category to find a cause that is of interest to you.

Canadians give for many different reasons, in different ways and amounts. For some it is a way to give back to a charity that has helped them or their family and ensure the charity is able to continue its important work, some give because giving simply feels good, while for others it is a way to reduce the tax implications that their Estate will realize upon death. Whatever the reason(s), the donor and his or her Estate are sure to benefit as well.

What can you gift?

Gifts to charity can take many forms, including cash, gifts-in-kind (such as real estate, securities such as stocks, bonds, mutual funds, works of art or other valuable collections), or a right to a future payment (such as life insurance, RRSP, RRIF, pension)

Cash

A cash bequest can be left for a certain dollar amount or it can be a share of the value of the Estate.

Using shares may also account for inflation and any increase or decrease in the value of the Estate over time. By leaving a share, the other beneficiaries’ entitlement under the Will are not affected by a charitable gift as the ratio between beneficiaries and charities can be maintained.

Gifts-in-kind

If the intended gift is something other than cash it is advisable to consult with the charity to determine whether the gift can be accepted. A gift of property may be kept and used by the charity or it may be sold.

A right to a future payment

This can be done by assigning your charity of choice as the beneficiary under these plans.

Tax benefits

On death a person is deemed to dispose of all of his or her assets. This can result in a significant tax liability on the Estate. By leaving a bequest in a will to a registered Canadian charity or other qualified donee the Estate would, under the current legislation, receive a tax credit against up to 100% of your income in the year of your death and in the preceding year. The full list of qualified donees can be found on the CRA website here.

The donation receipt is issued by the charity for the amount of cash or the fair market value of the donated property as determined by appraisal. The resulting tax credits will reduce taxes owing on the final tax return. This may help increase the remaining value of the Estate for the benefit of all beneficiaries.

Other things to consider

Spouse and dependants

If you have a spouse, or dependants, their entitlement to support from the Estate will need to be considered prior to making any charitable (or other specific) bequests in the Will. This is critical in order to avoid any potential estate litigation in the future.

Purposes

Consider providing instructions for whether it should be used for the charity’s general purposes, or to be directed towards a specific purpose or program.

 Alternate direction

Consider designating an alternate charity, or default purpose, in case the charity, or the specific purpose you originally chose, no longer exists at the time of death; or give discretion to your Estate Trustee to choose a charity with objectives similar to those of the charity you intended to benefit.

Gifting while incapacitated

If you want to ensure charitable giving continues during a period of incapacity during your life, you should add a provision in the Power of Attorney for Property giving your Attorney direction with respect to your wishes regarding charitable giving during your life.

Things change

Like any other provisions in a Will, as long as you have capacity you can amend the provisions dealing with charitable bequests.

Final thoughts

Leaving a charitable bequest in a Will is an opportunity to make a continued contribution to causes you believe in, or, perhaps, it may be your first opportunity to contribute in a way that might otherwise be impossible during your lifetime.

Whatever your particular circumstances, some planning with the benefit of professional advice will allow you to leave a legacy of which you and your family can be proud.

This blog post was written by Ines Jelic, a member of our Wills and Estates, Estate Litigation and Personal Injury teams.  She can be contacted at 613-566-2055, or by email at ines.jelic@mannlawyers.com.

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