Planning Perspectives

A look at life and finance from every angle.

From personal to professional, from family to financial, there are many facets to your life. Yet, each is interconnected. Planning Perspectives is a source of ideas and information to help you make the most of them all, all together.


An Important Component of Your Estate Planning

June 30, 2016 Giving, Planning Well

There are many good reasons for charitable giving. The top three reasons why people give, according to the Canadian Centre for Philanthropy, are:

When it comes to supporting charities, Canadians have always been generous. In 2013, about 82% of all Canadians gave to charity, donating over $12 billion.*

The opportunity to contribute to something worthwhile doesn’t go unrewarded. Federal and provincial governments recognize the value of charitable donations and provide tax benefits for those who give. The tax considerations to you personally and to your estate that can transform your charitable impulses into “Planned Giving” strategies in your tax and estate planning.

There are now an increasing number of ways to make charitable contributions other than writing out a cheque, and each will have a different impact on your current tax situation or on the amount of taxes payable by your estate. Here are five planned giving opportunities that might make sense to explore further with your Raymond James financial advisor.


A common route is to direct a certain amount of money or a portion of your estate to a selected charity through a bequest in your will. The charity issues a receipt to the estate for the fair value of the gift. The corresponding charitable donation tax credit can then be set against your estate’s taxes payable.

Donating Securities

If you were thinking about making a substantial cash donation to a favoured charity or institution, an alternative strategy is to donate securities from your portfolio. Unrealized gains on your securities are subject to capital gains tax when the security is sold. If you sell your securities for cash and then donate the cash, you have to include 50% of the capital gain as income. If you donate your securities in-kind, you include 0% of the capital gain as income and still receive a tax credit for fair market value.

Beneficiary Designations

You can also designate a charity as the beneficiary of your registered accounts (RRSPs, RRIFs, etc.). Your registered plan would pay the value of your registered accounts to the charity upon your death. Your estate would then receive a corresponding tax receipt for the donation. Additionally, you can also designate ta charity as the beneficiary of your life insurance benefits. Similarly to registered accounts, you will receive a tax receipt for the amount of the insurance proceeds paid upon death. Beneficiary designations can allow for a timely distribution and disbursement of your assets, may eliminate the need for probate and may allow for simpler estate planning.

A Charitable Remainder Trust (CRT)

A CRT gives you a way to make a substantial charitable donation of income-producing assets – securities, property, etc. – that are placed in a trust with the charity named as beneficiary. You retain control of the asset and its income stream during your lifetime, and afterwards the trust’s assets go to the charitable beneficiary. The tax credit is based on the present market value of the asset at the time the trust is made. A CRT removes those assets under administration from your estate and thus avoids probate.

Charitable Gift

Annuity In return for a charitable donation, the designated charity purchases an annuity, which pays you an annuity income during your lifetime. The annuity is structured so that you pay little or no tax on the income.

Private Foundations A private foundation is a charity that you can set up to hold your donations. With a foundation you have greater control as to the disbursement, investment, and management of your donations. A private foundation will incur ongoing legal, accounting, and administrative costs. Some financial institutions offer Donor Advised Funds (DAFs) which essentially allow you to maintain a private foundation without the complexity.

What Works for You?

There are many ways to be charitable, and the government will encourage generosity by reducing your current taxable income or that of your estate. Each planned giving strategy needs to be tailored to the needs of the individual. The size and nature of the gift may favour one approach or another depending on your financial planning strategy – all the more reason to include your financial advisor, accountant, and lawyer in the planning process. The desire to leave a legacy or to pass on to those in need requires thought and planning to accompany the sentiment of giving to a good cause.

*“Volunteering and charitable giving in Canada,” Statistics Canada, 2013