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Are there other types of charitable gifts I should consider?

It is always best to consult with your favorite charity/charities before making a planned gift. The staff of the charity will be happy to explain the various types of giving opportunities they offer their donors. You should also seek advice from your lawyer and/or financial planner.

What about using some of the money in my RRSP or other retirement plan to make a charitable bequest? Is this a good idea?

Yes. The combined impact of estate and income taxes can, in some cases, take up more than 70% of the assets in a retirement plan. However, if you fund a bequest to a charity from retirement plan assets, the full amount of the retirement plan assets can pass to the charity without estate or income taxes.

Is life insurance a good way to make a gift?

Yes. You can give a life insurance policy to charity and take an income tax deduction for this gift as well as a deduction for any additional gifts to the charity to allow it to pay any ongoing premiums. Alternatively, you can retain ownership of the policy and just name the charity as beneficiary, though no income tax deduction is available for this approach. In both cases, there are no estate taxes on the life insurance proceeds.

Is stock the only type of appreciated asset I can use to make a gift to the charity?

No. Many charities gladly accept gifts of land, manufacturing/office buildings, apartment buildings, limited partnership interests, cars, art, boats, planes, etc. It is always best to consult with the charity early in the planning process if you wish to make a contribution of this type, and to determine if the property’s use is related to the mission of the charitable organization so that you may qualify for maximum income tax advantages.

Does the income from one of these gifts have to go to me or can someone else, like my mother, receive the income?

Income gifts can be very useful to provide support for a person dependent on you, such as a parent or student. You receive the charitable deduction for making the gift, but the income recipient- for instance, your mother- declares the income for tax purposes. In all likelihood she is in a lower tax bracket, so there is less tax owed than if you received the income and used it to provide for her support.

Can the income from one of these gifts benefit both my spouse and me for our lifetimes?

Yes. Income gifts can be established to support the surviving spouse for his or her lifetime.

If I use stock, will either a charitable gift annuity or a charitable remainder trust be able to increase my income?

Yes. You may own stock that has greatly appreciated in value, but pays only a small dividend. By gifting that stock to a charity or charitable trust, you defer paying the capital gains tax, you realize a tax deduction equal to a portion of the value of the stock, and you could receive a much greater income than you realized from the dividends.

What are the tax advantages of a charitable remainder trust?

You can claim a charitable deduction for a portion of the amount you contribute to the trust- more specifically, for the calculated, present value of the remainder interest that ultimately will pass to charity. However, some of the income that you receive annually may be considered taxable income to you.

Then, what is a charitable remainder trust?

A charitable remainder trust- much like a living trust- holds assets on your behalf. However, a charitable remainder trust can only be used to hold gifts that ultimately will benefit a charity. You and the trustee agree at the time the trust is established on a type of payment to you: either an annuity payment representing a fixed dollar amount or a payment representing a fixed percentage of the trust assets, which are revalued annually. At your death, the assets remaining in the trust are transferred to the charities you designated when you established the trust.

What are the tax advantages of a charitable gift annuity?

With a gift annuity, you can claim part of what you contribute to fund the annuity as a tax deduction and part of the income you receive each year is tax-free. Additionally, if you fund the annuity with an appreciated asset- such as stock, art, a car, a house or building- you also escape some of the capital gains tax that you would owe if you had sold the asset.

What is a charitable gift annuity?

A charitable gift annuity is a contract between you and a charitable organization. In return for your gift, the charity agrees to pay you a fixed amount (based on your age) for the rest of your life. At your death the assets held for the annuity transfer to the charitable beneficiaries you designated. The benefit of a charitable gift annuity is that you make a one-time gift and receive a fixed amount of income for your lifetime.

I intend to make several charitable bequests in my will. Can I also make other charitable gifts during my lifetime that will pay an income back to me?

Yes, both a charitable remainder trust and a charitable gift annuity can pay you an income for a specified period of time or the rest of your life.

What is a contingent bequest?

A contingent bequest is often made by a childless donor who wishes to leave the bulk of their estate to their favorite charity, but there is a partner or sibling who needs to be provided for if they survive the donor.  The will states that the bequest will be made in full only if the partner or sibling predeceases the donor.  However, a testamentary charitable remainder trust may also be set up in the will.  Under this arrangement, the bequest would pass to a trustee who would invest the money and pay the net income to the partner or sibling for life.  At the death of the partner or sibling, the trust principal would pass to the charity.  A donation receipt for the “present value” of the future gift provides a tax credit on the donor’s final tax return.

What is a residual bequest?

A residual bequest leaves “all the rest, residue and remainder” of the estate to a charity(s) after the general and specific bequests have been made to family and friends.  If more than one charity is involved, the will can specify a percentage of the residue to each.

What is a specific bequest?

A specific bequest leaves an asset such as land or property to a favorite charity.  When the asset passes to the charity, any capital gain will have to recognize on the final tax return, but the executor has the option of electing to have a donation receipt for any amount between the asset’s cost and its fair market value at that time.  The flexibility allows the executor to balance taxable gain and the charitable tax credit to the best advantage of the estate.  The charity retains or sells the asset.

What is a general bequest?

A general bequest is the simplest form of a bequest and leaves a specific amount of money to your favorite charity.  The estate receives a donation receipt for the full value of the bequest producing a significant credit that will offset other taxes on the final tax return.

What are some of my bequest options?

There are many ways to structure your charitable bequest. Talk with your lawyer about these options: a percentage of the residue of your estate, a specific asset or dollar amount, and contingent bequests.

What is a bequest?

A bequest means that your will states that a part of your estate is left to a beneficiary.  A beneficiary may be a person or a charitable organization.  A charitable bequest is a transfer of assets or property at death by will to a not-for-profit organization or organizations for charitable purposes.

How do I make a charitable bequest?

Contact your lawyer to draft a will with a charitable provision or a codicil to your existing will.   You should also contact the Planned Giving Officer of the charity you want to leave a gift to for specific bequest language.

Why do I need a will?

At your death, a will serves as a road map telling your personal representative how to distribute your property and assets to family, other people, the church, and/or charities. With a Will, you can honor commitments to family and friends, and also support your faith community.  Without a will, you are powerless over how your assets are distributed. Instead, the laws of the Saskatchewan determine how assets are divided- which may not be the way you would have wanted.

What is Planned or Legacy Giving

A Planned or Legacy gift is the integration of sound personal, financial, and estate planning concepts with the individual donor’s plans for lifetime or testamentary giving.

Do I tell the charity I've left the gift?

This is up to you. Charities often like to know in advance so they can recognize your generosity. They can also tell you about specific opportunities for giving. Whether you let the organization know of your plans or not, is your decision to make.

Taking the first step

Think about to whom and why you’d like to leave a gift. Maybe you or someone you know has been helped by a particular organization. Maybe you’re an active volunteer or believer in the mission. You might want to leave a gift in memory of a loved one or for a specific use. If you need more help or you need to know more about a particular organization, do some investigating before leaving a gift. Call the nonprofit group of your choice. They can help you better understand what they do and what opportunities are available for giving. Contact your professional advisor for help. Your advisor can make sure you are getting the maximum tax and legal advantages allowed for your gift.

Who can help me arrange for a gift?

If you have a professional you are working with like a financial planner, lawyer, accountant or insurance agent, please talk with them about leaving a gift. A professional can tell you about the tax benefits of planned gifts. You can also call the Diocese of Saskatoon Catholic Foundation Planned Giving Officer: 306-659-5849.