Planned giving: your path to leaving a legacy

When it comes to being charitable, Canadians are no strangers. In my experience, Canadians are very willing and open to donating to local food drives or giving extra tips on their purchases to support local causes. However, I have found that many are unaware of a form of philanthropy known as planned giving.

Here are some common questions regarding planned giving:

Planned giving is a forward-thinking approach to philanthropy. Unlike one-time donations or annual giving, planned gifts are structured to take place in the future and are often established within your Will, or through an insurance policy or estate plan.

The key difference? Planned giving is strategic. It creates a lasting legacy by combining philanthropy with thoughtful financial planning and allows for you to make a gift that you may not be able to currently give.

For donors, planned giving provides the opportunity to create their legacies and to convert tax dollars into charitable gifts. How would you like to be remembered? As someone who wrote a final cheque to CRA for estate taxes owing, or as someone who created a lasting legacy for future generations by donating to charity and at the same time eliminated CRA debt?

For charitable organizations, planned gifts provide essential long-term stability and allow them to plan confidently for the future, knowing that legacy gifts will help sustain programs and expand their reach in the years to come.

No, it is not true and a very common misconception. Planned giving is very accessible. In fact, many impactful planned gifts come from everyday Canadians who simply want to make a difference and leave a lasting legacy.

There are options for everyone, regardless of their wealth. For example, naming a charity as a beneficiary of your RRSP, TFSA, or life insurance policy are simple and affordable ways to create a lasting impact, which leads me to the next question.

There are several different types of strategies and financial assets that can be used to benefit a charity. As mentioned, something as simple as changing the beneficiary designation on your RRSP, RRIF, or GIC portfolio can be a great starting point. Most people don't realize that from an estate point of view any donation made in the year of death to a charity can offset up to 100% of net taxable income in the year of death, and that can also be carried back one year.

For example, what this means is if there's a $500,000 tax liability in the estate, a $1 million donation of any one of those financial assets would trigger a tax credit in the amount of $500,000 – thereby eliminating the tax debt.

Another viable financial tool would be the gifting of an insurance policy. We all know that the insurance premiums for an insurance contract are far less than the death benefit that it provides. For donation purposes, we are greatly reducing the cost of that donation, which is eliminating the tax debt. No other financial asset can deliver the benefits that an insurance policy can.

So, I ask you again, given these examples, how would you rather be remembered? As someone who wrote a final cheque to CRA for a $500,000 tax debt or as someone who created a lasting legacy in their community for generations to come? As someone philanthropic and clever who donated $1 million dollars to charity and eliminated the $500,000 estate tax?

That is powerful, that is meaningful, that is making a difference.