12 October, 2022 Estate planning Financial Planning Investment Services

Leaving a legacy through charitable contributions

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Throughout your life the ways you give back may change and evolve as your finances grow. 

When the amount you can give grows, so do the ways you can donate. 


There are many ways to make a meaningful gift to a cause close to your heart, either in yearly donations or as part of a longer term estate plan. Learn how you can leave a legacy through charitable contributions. 


Five common ways to leave a legacy

Legacy giving is when you leave a gift to a charity or organization as part of your estate plan. Legacy gifts are distributed after you pass away and can be comprised of a specific dollar amount, a percentage of your assets, or an item of value. Here are some of the ways you can donate:


Through non-registered accounts (“in-kind”) — If you are holding publicly traded securities that have appreciated in value in your non-registered account (not an RRSP or RRIF) consider donating them “in-kind” to a charity after you pass away. You heirs will get a tax receipt equal to the fair market value of the securities donated, and won’t be taxed on the capital gains accumulated on those securities, as you would have if you sold the securities during your lifetime.


Through stocks and bonds — Another way to maximize your donation dollar is to donate securities like stocks and bonds. Say you had a stock that has appreciated or increased in value by $1,000. If you were to cash the stock in, you would realize a capital gain of $1,000 — of which $500 (50%) would be added to your taxable income.


However, if you were to transfer the stocks directly to the charity, there would be no taxable gains tax, plus you’d be eligible to receive the charitable giving tax credit for the full amount and you would be free to add the tax savings to your donation.


Leave a life insurance policy to charity - If you have a life insurance policy, you can name a charity to receive the proceeds upon your death.  Your estate will receive the donation receipt to reduce taxes owing.  


Bequeathing in a will — One of the most common ways to leave a large gift is through a charitable bequest, a donation you make through your will. This gift can be listed in the will as a dollar amount or percentage of estate assets.


Create a Charitable Remainder Trust — You can create a living trust, where you receive the income from the trust throughout your life, and upon your death, the remaining amount in your trust will be passed directly to the charity you name as a beneficiary.


Ways to save when gifting securities

Your generosity can also help you save. Charitable giving can be a tax-smart strategy — when you donate to registered charities, the donation can be used to reduce the amount of taxes you pay. So how can you save when the charitable donations are larger sums, or a part of your estate upon death?


Donate through your non-registered savings accounts — If your funds have grown in value you can donate any value in your account. The charity receives the full amount of your funds and you don’t pay any taxes on the donation.


Leave your legacy through charitable donations 

Including charitable giving in your estate planning ensures that you still have an impact on your causes and charities after your passing. 


Planning to leave a legacy can be overwhelming, but you can receive advice and assistance from a trusted advisor. If charitable giving is important to you, and you want to leave a lasting legacy, we can work with you to plan yearly contributions and your estate donations. Contact us to get started.