Estate Planning for your family and community

Estate Planning for your family and community
September 10, 2021 Roxy Rae

Estate Planning
Provide for your family and your community

Let’s be honest, no one wants to think about their own mortality.

Like it or not, it’s something each and every one of us will have to face – hopefully later. Much, much later. But detailing what you want to happen with your finances and assets after you’re gone is important.

In the spring of 2020, when the global pandemic was first announced and the world shut down, estate planners and online will sites saw a sharp increase in people creating and updating their wills as they contemplated the worst. While it shouldn’t take a global pandemic to put your wishes on paper, it has opened the conversation for many families – how do I  want to be remembered?

Of course, providing for your family and loved ones is a priority, but perhaps you’ve been a lifelong volunteer for an organization or there’s a cause that is close to your heart and you want to see it supported after you’re gone. Have you considered including a charitable gift in your estate and financial planning? You can provide for your family and support the causes you care about most. You don’t have to choose.

It has been estimated that only five per cent of Canadians have included a charitable donation in their wills. Over the next 10 years, if that number can be increased by as little as 3.5 per cent, it would result in $40 billion being directed to charities. The past 18 months have opened our eyes to the vulnerability of the charitable sector and how much it relies on  individual donations and fundraising events, so you can imagine what that kind of increase in donations would mean to your favourite charity.

You may ask yourself, ‘ How can I support my loved ones and the charities I love? I’m not a wealthy person.’ Wills are powerful tools and it’s easier than you think, no matter the size of your estate. Many gifts left in wills are larger than anyone could leave during their lifetime, creating meaningful impact.

If you are thinking of leaving a gift to charity in your estate planning, here are some things to consider:

Discuss your plan and your passions with loved ones. Having an open conversation with your loved ones about your passions and causes close to your heart will provide insight and understanding into your wishes. It may spark inspiration and get others involved in charitable giving and volunteering.

What kind of impact do you want your gift to make? Depending on the size of your estate gift, you may want to consider a more strategic giving plan. Large gifts can be impactful to any organization, but instead of providing one lump sum to your charity perhaps you’d prefer to support them over several years, or maybe forever. In that case, you may want to consider creating an endowment fund at your local Community Foundation. You can outline the terms of your fund during your lifetime to ensure the cause you’re passionate about has financial support forever. Every organization, no matter the size, has costs to run their programs and projects. Supporting their operating costs, or a specific project, year-over-year through an endowment fund will give them the freedom to focus on the good work they are meant to do and worry less about fundraising to keep the lights on.

Explore your estate planning options. This is where your advisor plays a key role. Communicate with them so they can provide customized  solutions for your unique situation. The reality is that your estate will be taxed, likely more than you’d like, and your advisors can help maximize tax advantages – in life and through your estate – for your specific situation. Making a charitable donation will allow you to direct where your money goes, while reducing – and sometimes, even eliminating – the taxes to be paid from your estate. Again, talk with your advisors for what is best for you.

  • Gifts in wills. Making a gift through your will, also known as a bequest, isn’t hard and it can be as simple as including a clause in your existing will. You will need to consider how much you want to leave – is it a specific sum? Or would you prefer to leave a percentage of your residual estate? Leaving just five per cent of your estate to charity will provide a generous donation while leaving 95 per cent of your estate for your loved ones. Discuss your intentions with your lawyer and they can explain the options that are right for you.
  • Gifts through life insurance. There are three ways to leave a gift of life insurance, each providing their own tax benefits, including:
    • Purchasing a new policy and naming the charity as the owner/beneficiary. You’ll receive a charitable tax receipt every time you pay the premium and 100 per  cent of the proceeds will go to the named charity.
    • Donating an existing term policy. If your existing term policy is up for renewal or about to expire and you don’t want its coverage, you can choose to donate it and receive an  immediate tax receipt for the fair market value.
    • Naming the charity as a beneficiary of your existing life insurance policy. Your estate will receive a tax receipt when the proceeds are paid out.

Like the idea of leaving a gift in your will, but want to see the impact the gift will have in your lifetime? While donations made in life are less than what would be left to a charity from an estate, they are still important and valued donations to help your chosen charity complete its important work. Providing donations during your lifetime allows the charity to build a trusting relationship with you, the donor, and can give you the opportunity to become more engaged with the organization’s work. You will see the impact of your immediate gift, as well as what your larger estate gift will mean to the organization.

During your lifetime gifts can be made by:

  • Cash/credit cards
  • Gift of securities (stocks, shares, government bonds)
  • Gifts from registered funds like RRSPs, RRIFs or TFSAs
  • Gifts of real estate

Check with the organization before initiating a donation to ensure they can accept the type of gift you’d like to make. Some smaller organizations may need to work with another organization, like a Community  Foundation or through CanadaHelps, to accept gifts of securities or real

Let the charity know of your intentions. It can be important to let the charity know that you have included them in your estate planning. You don’t need to share how much you are leaving them and you don’t need to be included in their “legacy societies” if you choose not to be, though being named can encourage other like-minded individuals to leave a gift in their will. By choosing to share your intentions with the charity you can work with them to outline how you’d like your gift allocated. Perhaps you’d like to support a specific program or capital campaign that is important to you or  your gift can be unrestricted. Leaving an unrestricted gift can show you trust the organization and allows them to use your donation in whatever way is needed at the time
the gift is received.

While every charity does its best to predict future needs through research and planning, there can be unforeseen needs arise too. Five years ago, not many would have predicted a worldwide pandemic, shifting businesses to work remotely and social gatherings to happen over Zoom (even grandparents!), but here we are.

As mentioned earlier, if your plans include creating an endowment fund that will provide annual support to your favourite cause forever, it is also advised to speak with your local Community Foundation or wherever the fund is created, to outline your wishes and draft a fund agreement. This can alleviate unnecessary stress for your loved ones during their time of grieving. Pre-planning can also encourage your family to be involved in the process of creating a fund and you can name them as future advisors. It is a way for your loved ones to remain connected to you through your charitable giving long after you’re gone.

Whether you wish to support the causes close to your heart during your lifetime, through your estate, or both, it is possible to provide for your family and your community through a well thought out legacy plan.