Every day, all over Canada, people’s lives are enriched by the work of registered charities and foundations, and other not-for-profit organizations in our communities. Funding for mental health, cancer research, shelter for the homeless, food for animal shelters, or a live performance by a local arts organization are just some of the ways not-for-profit organizations improve all of our lives and our communities.
Many Canadians generously give their money, time and energy to these organizations during their lives and there are over 160,000 to choose from in Canada. However, only 7% of Canadians support these charitable organizations by leaving a planned gift as part of their estate planning. This suggests that Canadians may be unaware that by leaving a gift in their will or estate plan to the charity of their choice, they can continue to help people in need, and promote their favourite cause long after they are gone. They may also not realize that there may be tax advantages to planned giving.
Planned giving can take many forms and can range from gifts of life insurance or fine art, the establishment of a private foundation, or can be as simple as reviewing one’s charitable objectives with a view to accelerating your intended donations now to maximize tax savings. The majority of planned gifts are gifts by will, insurance, or trusts.
Gifts left in wills are the most common form of planned gift, perhaps because it is most familiar with Canadians. The tax receipt from this type of gift may be used on the deceased’s final tax return to offset some or all of the tax payable.
Gifts using insurance products are flexible and powerful and are becoming more common in Canada.
Trusts can be complicated, but in a nutshell, a trust is created when an individual “settles” assets such as cash, securities or real estate into a trust, to set up an irrevocable gift in order that these assets be gifted to a charity after the individual dies. There are numerous advantages to trust planning as well as tax implications; therefore, this type of planning requires assistance from experienced, professional advisors.
Planned giving is unique to every individual’s circumstances. What works well for one person may not for another. Before you plan any gift, it’s important to seek advice from your professional advisors including your lawyer, accountant and financial advisor. Ideally, this team of professionals will work together to identify, plan and implement the best plan for giving that meets your philanthropic, tax and financial planning goals.
Our Pihl Law Wills and Estates Team would be happy to assist you and your family with the legal aspects of your planning needs.The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.