Home Economy Three ways to leave a legacy through charitable giving

Three ways to leave a legacy through charitable giving


Prince Harry and Meghan Markle have requested that their wedding guests forego traditional gifts in favour of charitable donations.John Rainford/WENN.com

In just a few weeks, the world will watch as Prince Harry and Meghan Markle marry in front of 600 invited guests and an additional 2,640 members of the public at Windsor Castle. Not even a royal palace can contain more than 3,200 wedding gifts so the couple have requested that their guests forego traditional gifts in favour of charitable donations. According to Kensington Palace, the couple has chosen seven charities representing issues that they are passionate about, including sport for social change, women’s empowerment, conservation, the environment, homelessness, children with HIV and the Armed Forces.

In Canada, May is also Leave a Legacy month, an initiative that encourages the public to consider their own philanthropic goals through planned giving. And while many of us will have far less to give than guests of the Royal Wedding, 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 three ways you can leave a lasting legacy:

1. Make immediate giving part of your daily life through cash donations or donations of Non-Registered Securities.

Cash donations are the most common way to make an impact on the communities you care about and it has never been easier. Many employers offer automatic payroll deductions and charitable organizations can set up pre-authorized debit options through your bank account or credit card. Not only does pre-planned giving help charities do their work; it also helps you plan your own monthly budget. And don’t forget, when making a donation to a registered charity, you will receive a tax donation receipt which can be claimed on your tax return as a credit.

Alternatively, if you are holding publicly traded securities which have appreciated in value in your non-registered account (e.g. not held in a RRSP or RRIF) consider donating them “in-kind” to a charity. In return, you’ll get a tax receipt equal to the fair market value of the securities donated, and you will not be taxed on the capital gains accrued on those securities, as you would if you sold the securities during your lifetime.

2. Arrange future gifts through your estate planning

Deciding how to distribute your estate in advance helps ensure your loved ones or important charity(ies) will be taken care of at your passing. There are many ways to achieve this goal. You can leave a set cash legacy, direct specific assets (publicly-traded shares or land, for example) or bequeath a share of the residue of your estate. Outlining your charitable wishes through your will has benefits. You can enjoy the use of your assets while you are alive, knowing that charities that are important to you will benefit in your will. Enhanced charitable tax credits are also available at this time.

Another way to do this is to consider a Charitable Remainder Trust. Individuals who are comfortable living off the income produced by assets may want to take advantage of the tax benefits that a living trust can provide. You receive the income from the trust throughout your lifetime, but upon your death, the remainder will pass directly to the charity you name as the beneficiary.

3. Think about the long-term benefits of creating a donor advised fund

If you want to establish a legacy by donating a lump sum now, but spread it among various charities or distribute it over several years, consider establishing a donor advised fund. This effectively creates a pseudo foundation for a fraction of the cost of setting up a private foundation. You receive the tax receipt when you make the donation and can then allocate the funds to any of Canada’s registered charities.

Charitable donations attract both federal and provincial non-refundable tax credits. On the federal side, you get a credit of 15 per cent for the first $200 of annual charitable donations. The federal credit rate jumps to 29 per cent for cumulative donations above $200. So, while we aren’t all in a position to make the level of impact on social causes as the House of Windsor, with proper planning, professional advice and a big-picture view of the opportunities that exist, we do all have small ways to make our own kind of difference.

Leanne Kaufman is the head of RBC Estate & Trust Services and president of Royal Trust Corporation of Canada and The Royal Trust Company


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