give in relation to competing personal, upon the death of the donor), or it may offsetting the taxes payable by making a
family and business interests, and can be structured so that several donations donation to charity of the RRSP/RRIF
work in conjunction with your overall are made over a period of time. Complex proceeds.
financial, estate and tax plan to minimize
property donations, such as those
Private foundations
taxes. By planning your gift, you are
involving real property, are also usually
able to separate the process of planning
considered to be a planned gift.
A private foundation may be, for the
with the actual support of your ultimate
donor who wishes direct control over
charitable beneficiary.
Bequests (including testamentary
and engagement in the granting power
trusts)
of the foundation, a useful vehicle to
Charitable donation tax credit
Bequests, a gift by Will, are easy to collect and distribute individual/family
The charitable donation tax credit
make as it is typically part of the Will assets over time for charitable
creates both an incentive to give, as well
preparation or Will revision process and beneficiaries/purposes. Donations to
as a choice about how individuals wish
it is revocable – donors can change their the private foundation can be made in
to support society and the amount of tax
minds and alter the terms as their life and upon death (where there are
they wish to pay.
circumstances change, so long as they successor directors/trustees to continue
Individuals who make a donation to
retain the requisite mental capacity.
the foundation). The private foundation
a registered charity (or qualified donee,
as defined in the Income Tax Act, Canada)
Bequests are also useful from an
enables a donor to plan his/her charitable
estate and tax planning perspective.
giving at his/her pace, in increments, or
receive a tax credit that is equal to the
Once dependents and those whom you
in one large sum, and direct his/her
highest marginal tax rate in every
wish to benefit have been taken care of,
legacy. In addition, the donor has
province for donations over $200, in the
giving to charity may be a great way to
choice in how he/she wishes to benefit
range of 43% to 50%, depending on the
use up any residue left over in your
society and how his/her tax dollars are
province. Taxpayers can claim gifts of
up to 75% of net annual income during
estate. In addition, the donor is able to
used.
life and up to 100% at death.
utilize the donation tax credit up to
Donor advised funds (through
Characteristics of donors
100% of his/her income on the final two
community or other public
income tax returns. A Will can also
foundations)
There are as many charitable plans
establish a charitable trust, which
A donor advised fund is an option
as there are different types of donors.
provides income to charities identified
for individuals who wish to have the
The donor, who would typically plan his
/her gift, may wish to establish a long-
by the deceased or selected at the
privacy and planning features of a
discretion of the trustee.
term or otherwise significant gift based
private foundation, but who may not
on his/her motivation to create a
Gifts of life insurance, RRSP/RRIF
wish to be directly involved in the
personal or family legacy. The major
administration of their legacy. Donor
It is possible to make a charitable
incentive to give is usually based on gift by designating charity as the
advised funds can be donated based on
altruistic reasons, such as wanting to beneficiary of your life insurance policy
a plan, over time, all at once, or as part
give back to the community or to or RRSP/RRIF, either directly on the face
of a deferred gift. However, the donor
support an important societal initiative
will no longer have control over the
of the policy (assets pass directly to
or goal. Because the focus is based on a
assets or the direction or use of the
charity) or in the Will (assets pass
legacy of some sort, the charitable plan
through the estate).
assets, having ceded control to the
has to be sustainable and/or accomplish
community foundation or other public
Life insurance can be very
foundation. Notwithstanding, the
the stated purpose over a period of time.
complementary to estate planning needs
donor typically has the right to make
The long-term commitment and the
because it can be used to replace income
non
binding
suggestions
or
amount donated is what differentiate the
(for assets disposed of in life) for ultimate
recommendations to the foundation
planned giving donor from the impulsive
beneficiaries, to create wealth in the
regarding the annual grant of the fund
or occasional donor who may, by
estate to fund legacies, pay for liabilities,
contrast, be driven by immediate,
held in his/her name.
costs to the estate, or to make a large
emotional motivations in response to a
charitable gift with little cost to the
The initial charitable gift planning
current fundraising appeal or a pressing
donor since the payments are made in
discussion
humanitarian crisis.
instalments over time.
The first part of any charitable
Ways and means of making a planned
In the case of RRSP/RRIF proceeds,
planning discussion is determining the
gift:
they are the most heavily taxed assets in
donor’s charitable intent. Equally
A planned gift usually takes into
the estate, taxed as income on the
important, when a plan contemplates a
consideration the timing of the gift, the
deferred gift or significant portion of an
deceased’s final income tax return.
type of property most effective to give, Where there is a spouse or other
individual’s net worth, is for the advisor
and the quantum of the gift in relation to qualified dependent, the RRSP/RRIF
or gift planning consultant to ascertain
other personal considerations. With a may be rolled over to that spouse/
whether the client has a valid Will and,
planned gift, the benefit to the charity is dependent on a tax-free basis. Where
if so, whether it reflects his/her current
typically deferred until a future time (i.e.
there is no spouse/dependent, consider
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