HOW TO CHOOSE THE METHOD OF MAKING A CHARITABLE GIFT

When you’re confident you have provided financially for yourself and your loved ones, you may begin thinking about helping others through charitable giving. If you’re making a significant donation, you’ll find there’s a wide variety of ways to give. And it’s your personal wishes and  financial situation that point to the donation methods that suit you best.

Wishing to experience the giving. Instead of giving through a will, many people feel a greater satisfaction from giving during their lifetime and staying informed of the charity’s work. For an even greater sense of involvement, some organizations enable a donation to be designated toward a specific purpose. Methods to give while living include cash, donor-advised funds, and securities or mutual funds.

Thinking about longevity. Some people want to make a significant gift but are concerned about supporting their retirement lifestyle if they live to a very old age. Solutions include leaving a bequest through a will or combining a gift with retirement income through a charitable remainder trust or charitable gift annuity.

Timing the tax relief. If you base your giving strategy entirely on gaining the most tax relief, you would usually choose a method that takes effect on your passing, benefitting your estate. Up to 100% of a taxpayer’s net income can be claimed as donations in the year of passing and the preceding year, compared with up to 75% of net income during a taxpayer’s lifetime. However, occasions may arise when giving while living becomes the taxsmart choice – such as a year you sell property or your business and want to reduce your tax bill.

Immediate tax relief is provided by gifts of cash, donor-advised funds, charitable gift annuities and charitable remainder trusts. Tax relief to the estate is provided by bequests through a will and donations using registered accounts. Life insurance, securities and mutual funds can provide either immediate tax relief or tax relief to the estate.

Looking for greater value. Some donors may be considering a large cash donation but want to explore ways to make their money go further. One way is giving appreciated securities or mutual funds, as the tax you would normally pay on capital gains is eliminated. Giving a life insurance policy can also add value, as the total cost of premiums you pay can be less than the insurance proceeds the charity receives.

Holding a large RRSP or RRIF balance. If you’re left with significant assets in your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF), those assets could represent your estate’s largest tax liability. However, by designating a charity as beneficiary of the RRSP or RRIF, the estate receives a donation tax credit that can potentially eliminate the tax payable on the RRSP or RRIF.

Talk to us when you’re thinking about charitable giving, so we can help you choose the planned giving method that best suits your personal situation.

WAYS TO GIVE

Larger charitable donations can be made in a variety of ways – here are common methods and vehicles.

Gifts of cash. It’s the simplest method, with a tax donation receipt enabling the donor to claim up to 75% of net income.

Bequests in a will. Donate a specific amount, a percentage of estate assets or the remainder of your estate after providing for heirs.

Securities and mutual funds. A donor receives a tax receipt for an investment’s fair market value, with neither the donor nor charity paying tax on capital gains.

Life insurance. An existing or new life insurance policy can be donated to either benefit the donor during the donor’s lifetime with tax receipts for paid-up value and premiums, or benefit the donor’s estate with a tax receipt for policy proceeds.

Donor-advised funds. A donation is invested in funds that grow tax-deferred over the long term, with grants given periodically to charities of the donor’s choice.

Registered accounts. When naming a charity as beneficiary of an RRSP or RRIF, the donation tax credit can offset the tax payable by the estate on RRSP or RRIF assets. Naming a charity as beneficiary of a Tax-Free Savings Account (TFSA) can help offset other taxes payable by the estate.

Charitable gift annuities. A sum is donated, with a portion becoming the gift and the remainder purchasing an annuity that provides the donor with tax-advantaged income for life.

Charitable remainder trusts. Assets are transferred to a trust that pays income to the donor for life or a specific term, after which remaining assets are distributed to the charity.

This material was prepared for and published on behalf of the representative named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, financial planning, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. (“ACM”). Representatives of Assante Financial Management Ltd. (“AFM”) may offer non-securities-related financial planning through an outside business activity. Investment recommendations must be provided by representatives of ACM or AFM. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither ACM or AFM nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trademarks or service marks (“Trademarks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trademarks herein does not imply any license has been granted to any third party. ACM is a Member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2020 Assante Wealth Management (Canada) Ltd. All rights reserved.