Giving While Living
Ron Hatcher – Senior Financial Consultant, Investors Group
You’ve reached that comfortable age when you have the time and resources to consider the legacy you wish to leave – and you may decide that the time to give is now, not later. If so, here are some giving-while-living strategies that can offer significant benefits to your estate as well as making a donation to the charitable organization of your choice.
Name the charity as beneficiary
Leave a bequest in your Will to a recognized charity. Your estate will receive a charitable donation tax receipt.
Establish a Donor Advised Fund
This tax-favoured vehicle avoids the administrative responsibilities and costs associated with establishing a private foundation. However, it does require a donation to a public foundation and the Fund is subject to administration fees. You receive a tax receipt for contributions made to the fund from the public foundation and also retain the right to recommend which charity or charities are to receive allocations of the fund’s income.
Establish a Charitable Remainder Trust
This option allows you to donate capital while you live on the income. A Charitable Remainder Trust is irrevocable and can hold assets such as cash and mutual funds. The named charity has no access to trust capital during your lifetime — all interest and dividends are paid to you as taxable income. Upon your death, the trust assets – known as the remainder – go immediately to the charity. Remainder assets are not subject to probate fees, nor are they usually subject to claims by creditors. You will receive a charitable receipt for a portion of your donation, based on your age at the time of the donation and current interest rates.
Donate a life insurance policy now
Donate a paid-up policy or one that requires ongoing premiums and receive a charitable receipt based on the cash surrender value of the policy plus accumulated dividends. The premium payments you make each year will also generate a charitable receipt.
Establish a Charitable Life Annuity
You make your charitable gift now and continue to receive a lifetime income for yourself and/or your spouse from the assets you’ve donated. A large portion of this annuity income will be tax free and will not trigger Old Age Security clawbacks. You will receive a charitable receipt for a portion of the donations, with the amount of the receipt based on the amount of annuity income you elect to receive and your life expectancy.
Donate publicly traded stocks or securities
There is no capital gains tax on appreciated stocks and mutual funds when they are donated to a recognized charity either while you are living or through your Will.
Establish a Private Foundation
This option ensures your generosity lives on and can permanently associate your name or your family’s name with the causes you’ve chosen. A professional advisor can help map out the giving-while-living strategy for you.
This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.