MAKING A CHARITABLE LEGACY
PART OF YOUR ESTATE PLAN
We draft many Wills in our law practice, but the minority of people provide for charity. Why doesn't the current generation provide more to charity? We believe there are a number of reasons:
- There is substantial ignorance concerning the taxation of estates and the benefits of charitable giving. Many people do not realize that RRIFs and RRSPs will go into their income at the time of death (or if there is a surviving spouse and a rollover of funds, on the spouse's death). This obviously can create a substantial tax liability with items such as RRSPs, RRIFs, and capital gains. Because most charitable bequests are tax deductible, there is a substantial benefit to providing for charity within your estate plan.
- Perhaps as an indirect result of increased government taxation, people appear to believe, or wish to believe, that individual charitable giving is not as important as it once was. This might be the case for the most basic of human needs within our advanced society. However, more sophisticated needs such as the opera, clean air, etc. and the realization in recent years that government cannot provide for all of the needs of our society, still leaves charity with a place—maybe an even larger one. But the best deal is that instead of the government choosing where your money goes, this time you are in the driver's seat.
- There is a lack of awareness about giving alternatives, like providing a life estate to the donor (so he or she can continue to live in their home) with the real property passing to the charity upon the death of the donor. This has tax advantages while you are alive. Likewise, tax deductible insurance premiums to provide for an insurance payout on the death of the donor. Insurance companies have a wide range of products and a large breadth of knowledge and resources that can be provided at no cost to potential policy holders. Insurance can be obtained at higher ages than the past for healthy individuals. Of course, an insurance agent will call, but the options should be considered.
- There is a reluctance on the part of professional advisors, including lawyers, accountants, and financial planners, to suggest charitable giving. It is often perceived by clients as meddling in their affairs, or perhaps it is seen as a coercive tactic on the part of the advisor. Maybe it is just the advisor's reticence or the time it takes. To not suggest the direct taxable benefits of charitable giving might not be in your client's best interests, either. Are advisors doing their job if they don't even bring the subject up?
The bottom line is that when you are making your retirement plans, drafting your Will, or just daydreaming about a better world, you ought to consider the benefits of a charitable legacy. Such a legacy could be the gift that keeps on giving. What better way to face eternity than knowing you have helped to provide some needed green space, enable salmon return to a local stream, or cure some childhood disease.
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