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Incorporating Charities Into Your Estate Plan

Many of us have causes or charities that we are passionate about and most of us engage in charitable giving at some point in our lives. Very few Canadians however make charitable giving a part of their estate plan. And that is too bad because there are some real benefits to doing so.

In this article, we will explore why and how you might wish to incorporate charitable giving into your estate plan.

Reduce the Tax Burden on Your Estate

When you die, you are deemed to have sold your property and cashed out your investments such as your RRSPs. Any resulting capital gains or income tax is then due to be paid to the government before the remainder of your estate can be divided amongst your beneficiaries.

Depending on what assets you have at the time of death, this deemed deposition can impose a significant tax burden and reduce what you are able to leave behind to your family. In most cases, when you make a charitable donation through your estate, your estate then becomes eligible for a tax credit which reduces the overall amount of tax owed by your estate.

Leave a Legacy.

In addition to receiving the benefit of a tax credit, there are of course the philanthropic reasons for giving to charity through your estate. You may leave a legacy to a charity or cause that is important to you or you may even leave it up to your executors as to where the money will be donated.

How to Incorporate Charitable Giving into your Estate Plan

Just like there are many charities to choose from when you begin to engage in planned giving, there are also many ways that you can structure your gift. These include:

  • A bequest for a specific amount of funds from your estate.
  • You may leave a percentage of your estate so the amount will vary depending on what you have left at the time of death.
  • You may leave a gift of securities or other investments.
  • You may leave your donation in the form of an endowment fund.
  • You may designate a charity as a full or partial beneficiary on a life insurance policy.

Next steps

If you are considering making charitable giving a part of your estate plan, then it is important to speak with an estate lawyer and possibly also with your accountant and/or financial advisor to help you develop the method of giving that is going to work best for you and your unique estate circumstances.

There will be many factors to consider including how your gift will impact your overall estate and your other beneficiaries as well as what the tax implications might be.

Contact Levy Zavet Today

At Levy Zavet, we can help you develop an estate plan to help you ensure that your wishes are followed – including any wishes you may have about supporting your favourite causes or charities. To speak with one of our lawyers, contact us today.