Leaving a Legacy

You’ve worked hard throughout your life to increase the value of your assets, and you want to use them to secure the well-being of your family and to help the charities you support. Leaving a gift in your will to a charity is an easy way to ensure that your values and compassion will continue to be felt for generations. Leaving a legacy is a fantastic way to extend a lifetime of support. As you plan your family’s future, you are passing on a message of humanitarianism, a message about the cause you cherish. Including TRAS as a beneficiary in your will, life insurance or by donating mutual funds leaves a legacy of a lifetime, and provides future generations with the means to build a brighter life.

GIFTS TO CHARITY MAY BE LARGE OR SMALL

Whether you make a transformational donation or small charitable gift, you’ll be helping others. You can use a variety of methods to make your gift, such as designating a percentage, share or a specific amount of your estate to a charity. Leaving a specific dollar amount means the value of the gift won’t change as the value of your estate grows or shrinks, compared to a gift that’s a percentage of your estate.

Examples of such gifts include:

  • Considering charity as an extra child, in addition to your biological children, in the distribution of your assets
  • Dividing the estate in half, with one portion for family and the other portion for charity, particularly if you are single
  • Choosing to leave your entire estate to charity, often if you have no family obligations

TAX CONSIDERATION FOR LEGACY GIFTS

There are considerable tax benefits to making a legacy gift. If you leave a gift to a registered charity, your estate can use the receipts issued to reduce or eliminate taxes owed.  During your lifetime, you can use charitable receipts for up to 75% of your net income in a year to offset taxes owing. However, your estate can use charitable receipts for up to 100% of your net income in the year of your death. Your executor may re-file your tax return for the year prior to your death if there are more charitable receipts than required to eliminate taxes in the year you passed away.

Tax laws also allow you to minimize or eliminate taxes to your estate through in-kind donations of mutual funds or stocks, as well as direct designation of life insurance policies, RRSPs, RRIFs or TFSAs.

Tax credits gained through charitable donations provide a valuable and responsible tax-planning tool during your lifetime and for your estate.

CHARITABLE BEQUESTS

Charitable gifts made through a will, also known as charitable bequests, are the most common form of planning gifts. Many people leave charitable bequests as a statement to their values and to make a final show of support for causes they care about.

Giving options include:

  • Cash gifts
  • Life insurance
  • Publicly traded stocks, mutual funds and bonds
  • RRSPs /RRIFs/ TFSAs

Cash Gifts

Gifts of cash are typically stated in your will in one of the following ways:

  • A percentage of your estate
  • A residue or remainder of your estate
  • A set amount stated in your will

The residual value of the estate is the amount remaining after payment of all outstanding debts, expenses, income taxes and any specific bequests.

Life Insurance

If you have life insurance policies that you no longer need to protect your family or an asset, you could use them to make a legacy gift. If they’re whole life or universal life policies, they may have a substantial cash surrender value.

When you name TRAS as a beneficiary of an insurance policy, the policy isn’t considered a part of your estate and so isn’t subject to probate. As a result, the proceeds will be forwarded to TRAS more quickly than if the money were to go through the estate, another advantage of choosing this option. Whether a charitable gift or not, a life insurance benefit isn’t subject to tax.

Publicly traded stocks, mutual funds and bonds

You can make a gift of publicly traded shares, stocks, mutual fund units and bonds through your estate. This can provide the estate with significant tax saving, if these investments are worth more at the time of your death that when you purchased them. Make sure your will gives your executor the option to make these donations in-kind. In this instance declaring your shares, stocks etc. as a gift-in-kind allows you to offset capital gains.

RRSPs, RRIFs and TFSAs

You can name TRAS as a beneficiary of your RRSPs, RRIFs and TFSAs.  For an RRSP or RRIF, although your estate must still declare the registered retirement funds as income, the tax credit generated by the charitable receipt can offset any taxes that are due on the income. As is the case with life insurance policies, making TRAS the beneficiary of a retirement fund means that the money will usually be received and put to use more quickly than if it flows through an estate and isn’t subject to probate

The information contained is general in nature and is not a substitute for independent legal advice. We recommend you seek independent counsel before making a planned gift.

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