Philanthropy and Legacy Planning

When it comes to your philanthropy, you’d like to use some of your wealth to help make a difference after you’re gone. Other than setting up a foundation or a non-profit organization, this means bestowing a portion of your estate to a registered charity. There are some ways to leave your money safe.

Northern River Financial provides a good source of information in formulating your legacy plan. They have a network of legal professionals and community connections that you can consult and engage in the process.

Legacy planning goes beyond estate planning. While estate planning deals with distributing your assets according to your wishes with an eye to minimizing taxes, legacy planning involves another important element – your family. It’s important to ensure everyone is on board with the philosophy behind your philanthropy.

Plans for a legacy should be used as an opportunity to communicate with your family, share your values and clearly explain how your wealth will be divided and why. This allows them to understand your values and desires, accept them and make suggestions themselves. Working together, your family may be able to help shape the future of your legacy and contribute in a meaningful way.

Options for leaving a legacy

Charitable bequest in your will. This is the easiest way to make a gift and ensure it is distributed according to your wishes. It is included in the value of your estate.

Real estate gift. You can leave property, buildings, land, or a home to charity in your will or while you’re living. Your estate will receive a tax receipt which can offset final taxes.

Life insurance beneficiary. Naming a charity as a beneficiary of your life insurance policy, your estate also avoids taxes on the gift and the premiums paid. The organization will receive the proceeds upon your death.

Directly designated RRSPs or RRIFs. Naming a charitable organization as a beneficiary of your retirement plan transfers the proceeds directly to the charity, bypassing probate. Your estate will receive a charitable tax receipt which will help counterbalance any tax liabilities.

Charitable remainder trusts. You can name a charity as a secondary beneficiary. During your life, you’ll receive trust income. The charity will receive the remainder after your death.

Annuity agreement. This is an arrangement with a charity where you give them cash or property in exchange for a guaranteed lifetime or pre-defined period of income. Upon your death, they receive the remainder of your contribution.

Residual interest. This option enables you to leave real property you live in or other property you own to a named charity. You can enjoy the property while you live and receive a tax receipt for the property value. The charity receives the property deed upon your death.

Key Considerations

  • Considering setting up a trust, foundation, or a non-profit organization
  • Developing a team of accounting and legal professionals
  • Distributing your assets according to your wishes to minimize taxes
  • Communicating with your family to share your values
  • Explaining how your wealth will be divided to shape your future legacy