Ways to Give
There are a number of ways to make a charitable gift and each will have different benefits. While making a gift in a will is the most common way to support charities through your estate plan, there are other types of gifts that may suit your needs and financial situation. We encourage you to talk to your professional advisor and your charity of choice who can help you decide which option(s) will work best for you and your family.
When you include a gift in your will, you can direct the gift to support a particular charitable program or activity. Or, you can allow the charity to decide how best to use the gift to support their greatest needs at that time. It is also important to use the correct legal name of the charity you would like to support. We recommend that you contact the charity directly to ensure your gift is directed where you intended and to make sure your wishes can be met.
Types of Bequests
There are different kinds of bequests including donating a specific sum of money, a percentage or portion of your estate, a transfer of securities or a gift of real estate. For each, you must use very specific language to indicate the precise distribution of your assets.
Here are a few examples:
- Specific Bequests
- Residual Bequests
- Contingent Bequests
A specific dollar amount or a particular asset is bequeathed. (e.g., $5,000, 100 shares of XYZ Company or 100 Anywhere Street, Vancouver, BC)
This gift amount is what is left over in your estate, or a percentage of it, after all other gifts, debts, expenses and taxes have been paid. (e.g., the entire residue of your estate or 20% of the residue of your estate)
This gift allows you to leave your entire estate, or a portion of, to a particular charity if your named beneficiary does not survive you.
- A tax receipt will be issued to your estate for the amount of cash left to the organization or for the fair market value of property given.
- You have the ability to provide future support to the charity of your choice with minimal impact to your current financial situation.
A well-prepared, up-to-date will is essential to ensure your future gift is exactly what you want it to be. We encourage you to talk to your professional advisor and your charity of choice. They will be able to help you decide which option(s) will work best for you and your family and will be able to provide you specific language to use. Download Sample Bequest Language (PDF)
If you sell your appreciated securities, you will incur capital gains tax. However, if you donate them directly to a charitable organization, you will pay no tax on the capital gains and you will be issued a tax receipt for the full fair market value of the securities at the time the charitable organization receives them.
To arrange the gift of publicly traded securities, you or your broker need to contact the charitable organization, or check their website, to request a securities transfer form.
- No capital gains tax
- Tax receipt for the full fair market value at the time the charity receives the securities
- You can make this type of gift now, or in your will
- You retain the right to use the property with no impact on your current lifestyle
- When the property title passes, you will receive a tax receipt for the then present value of the donated residual interest.
- There is no taxable capital gain when you give a residual interest in a principal residence.
- The gift removes the donated property from your estate, resulting in lower estate-related fees in the future.
- Tax receipt will be issued and can offset income taxes immediately or in your final income tax return if real estate is bequeathed in your will.
- You can make this type of gift now, or in your will.
Each organization has a minimum gift amount required to establish an endowment fund. The capital can be increased at any time by additional donations from the donor, family or friends. An endowment can be created during your lifetime, or can be arranged through instructions in your will.
- Provides long-term support to the charity
- You will receive a tax receipt for all contributions made to the endowment during your lifetime or your estate receives a donation receipt for an endowment established and funded through your will.
- You can make this type of gift now, or establish an endowment in your will.
By giving through life insurance, you can make a significant future gift with only a small annual or monthly cost. There are several ways of leaving a legacy using life insurance and the tax savings are different for each.
- Assigning an existing policy so the charity becomes owner and beneficiary;
You will receive a tax receipt for the fair market value of the policy at the time when you assign the policy and, if premiums are still payable, you will also receive tax receipts for all premiums you continue to pay for the policy.
- Purchasing a new policy with the charity as owner and beneficiary;
You will receive a tax receipt for all premiums you continue to pay for the policy.
- Naming the charity as the beneficiary, but not the owner, of a new or existing policy;
Your estate will receive a tax receipt for the amount of policy proceeds received by the charity and therefore a tax credit that can be used in your final tax return. A tax receipt will not be available to you for premiums paid for the policy during your lifetime.
- Naming a charity as the beneficiary, but not the owner, of your policy through your will.
Your estate will receive a tax receipt for the amount of policy proceeds received by the charity and therefore a tax credit that can be used in your final tax return. A tax receipt will not be available to you for premiums paid for the policy during your lifetime. To ensure that the results will be as you intended, please consult with your insurance company as well as your financial and legal advisors to ensure that the beneficiary designation of the policy and the clause in your will are properly completed.
You receive a tax receipt, significantly reducing the cost of the premiums if the charity is the owner and beneficiary of the policy.
The gift removes the policy proceeds from your estate, resulting in lower estate-related fees in the future.
You can make a significant charitable gift of the policy proceeds through payments of relatively small premiums over several years.
This type of gift will have minimal impact to your current financial situation.
Gifts of retirement plans are made when you name a registered charity of your choice as the designated beneficiary. This means that upon your death the charity would receive the proceeds and your estate will receive a charitable receipt. This receipt will counterbalance the tax payable on your final tax return.
It is recommended that you consult with the financial institution holding your RRSP/RRIF to ensure that it permits the designation of charities as beneficiaries.
- Your estate will receive a donation receipt to be applied against tax on the distribution of retirement funds.
- The gift removes the proceeds from your estate, resulting in lower estate-related fees in the future.
- Gift Plus Annuity
- Charitable Insured Annuity
- Charity Self Insured Annuity
Through a Gift Plus Annuity arrangement, you purchase a commercial annuity that provides a specified guaranteed annuity payment to you, for life or for a specified term, and use the excess funds to make a current gift to the registered charity of your choice.
The charity will issue a tax receipt for the amount of the current gift you make to the charity. In addition to the tax receipt, you can also increase your non-taxable income, as, depending on your age, your annuity income may be partly or fully tax-free.
Through a Charitable Insured Annuity arrangement, you purchase a commercial annuity from a life insurance company and then use part of the monthly annuity income to pay the premiums on a life insurance policy that has the registered charity as the owner and beneficiary. Upon your death, the charity receives the proceeds of the life insurance policy.
With this type of arrangement, you receive income from the annuity (often enhanced as compared to what you would receive from other investment vehicles) as well as tax credits for the insurance premiums you pay. You can use the tax credits to offset tax payable on your income and thus have a higher after-tax income.
A gift using an annuity can also be made by donating cash or other property to certain registered charities that are permitted to issue annuities, in exchange for a guaranteed lifetime income (or for a specified term). This type of annuity is an agreement directly between you and the charity. Upon death, the charity would use the remainder of the original contribution for its charitable purposes.
- Tax benefits range depending on the annuity arrangement
- You receive guaranteed payments for life (or a term of years), all or substantially tax-free
You will receive a charitable donation receipt for the present value of the future gift (the “charitable remainder”) which the charity will receive when the trust terminates. That value is calculated based on actuarial tables, taking into account the value of the property transferred to the trust, interest rates, the age of each beneficiary, or the term of the trust if it is for a specific number of years.
There are two types of charitable remainder trusts:
- Irrevocable Charitable Remainder Trust
- Revocable Charitable Remainder Trust
If you choose an irrevocable charitable remainder trust, it means you can’t change your mind. You receive a tax receipt now for the present value of the remainder interest.
If you choose a revocable charitable remainder trust, you can nullify the trust during your lifetime. Instead of receiving a tax receipt immediately, your estate will receive the tax receipt once the assets are delivered to the charity.
- You receive an immediate tax receipt or your estate will receive a tax receipt.
- You can enjoy income from, or use of, your assets throughout your lifetime.
- Your trust is professionally managed.
- You can avoid tax on a portion of, and possibly all, of the capital gains incurred.
If you are thinking about establishing a trust, you should review the tax implications with your financial advisor. Drafting a trust document can be complicated, and requires the assistance of a lawyer to tailor the trust to your own circumstances.