Ian Wood

Winnipeg, MB

May is Leave a Legacy Month in Canada. There are many ways to make a meaningful gift to a cause close to our hearts, either in the near term or as part of a longer-term estate plan. Here are the answers to a few of the most commonly asked questions about leaving a legacy to support your favourite causes.

Question 1 – I’d like to leave some money for charity in my will. How do I got about doing that?

In Canada, leaving a gift to a charity in your will is a great way to support the causes you care about. Adding the charity as a beneficiary to your will is simple.

First, you need to decide how much you want to leave the charity. Is it a specific dollar amount? Or a percentage of your total estate? You can discuss the pros and cons of each method with your lawyer.

Next, you need to find the official registered name of the charity. You can ask the charity for this information, or search the Canada Revenue Agency’s (CRA) list of charities on their website. For example, Lögberg-Heimskringla is registered as “Logberg-Heimskringla Incorporated.” It is also helpful if you have the registration number. For LH, that’s 103373635 RR 0001.

Once you have the names and registration numbers, you simply book an appointment with your lawyer to either draft a new will or add a codicil to your existing will. Your lawyer will let you know which approach is more appropriate for your specific situation.

Question 2 – I’ve heard I may be able to save some taxes on my estate? Is that true?

Yes, that is true. In Canada, some of the more common sources of significant taxes at death may come from realized gains on investments or properties, or the balance remaining in any registered accounts (i.e., RRSPs or RRIFs).

A charitable donation creates a donation tax credit that can be applied by your executor in the most efficient manner for your estate. A charitable donation prescribed in a will may be used to offset gains in the estate, or the last two taxation years of the deceased individual.

Question 3 – Are there any tax savings I can realize now?

Yes. In Canada, a donation made this year will result in a tax credit that can be applied to the current year’s income taxes, or carried forward up to five years to be applied to a future year’s income taxes, if that is more efficient.

Every province has a different tax credit, so if you are interested in estimating the tax benefits of making a gift today, you should discuss this with a tax advisor familiar with your jurisdiction.

Question 4 – Is it better to leave a gift in my will, or invest through my local community foundation?

It ultimately depends on your goals. You might leave a gift in your will directly to a charity or several charities. This may be a good choice is you want to leave a lump-sum to one or two charities, and you are happy with the charities receiving the full amount of your donation immediately. Any gifts made directly to charities in your will are technically considered public information. A record of any will that has passed through probate can be accessed through the court system.

One way to increase your privacy is to instead leave your funds to community foundation, such as the Winnipeg Foundation, which supports LH. You may dictate the charity or charities you wish to support, but generally only the income earned from your donation is actually provided to the charities each year. In this case, the fact that you used the foundation is still public knowledge, but the ultimate charities being supported are not. Many community foundations offer multiple options, so you should discuss your goals with the community foundation to determine if they are able to administer the funds in the way you would like.

You may also wish to consider a Donor Advised Fund (DAF) program to essentially create your own private foundation. In this case, you can dictate how the funds are to be distributed to a charity or multiples charities. There is a minimum payout that needs to be distributed each year – currently five percent of the fund balance – but you may do more if you would like. Every DAF is slightly different, so it is very important that you discuss your wishes with the provider you choose to ensure they can administer the fund the way you would like. As with the community foundation, there is a level of privacy as only the DAF provider is named in the will, but not the underlying charities being supported.

If you plan to leave a legacy, please speak with your lawyer or financial advisor. Marketing Committee Member Ian Wood, CFP®, CIM®, MFA-P, has also graciously volunteered to answer any questions you may have. You can reach Ian at Cardinal Capital Management by calling (204) 594-3667.

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