A charitable bequest is simply a distribution from your estate to a charitable organization through your last will and testament. There are different kinds of bequests. For each, you must use very specific language to indicate the precise direction of your assets, and to successfully carry out your final wishes. In any charitable bequest, be sure to name the recipient accurately. There are a few types of charitable bequests, for example:
- General Bequests are legacies left to certain people or causes that come from the general value of the estate, and are made by designating a specific dollar amount, a particular asset or a fixed percentage of your estate to the cause of your choice.
- Specific Bequests are made when a particular item or property is bequeathed for a designated purpose.
- Residuary Bequests are made when you intend to leave the residue portion (any leftover property) of your assets after other terms of the will have been satisfied.
- Contingency Bequests allow you to leave a portion of your estate to a particular charity if your named beneficiary does not survive you. Cash or Securities
- A cash or security gift is an amount made out to a charitable organization of your choice. Gifts of cash are available for immediate use in the form of cash, cheque, credit card, or pre-authorized contributions paid monthly. They can also be given in the form of a general bequest in your will and testament.
A gift of life insurance is made when you name a charitable organization of your choice as the beneficiary. This means that you control the policy, and the organization would receive the insurance proceeds upon death.
RRSPS or RRIFs
Gifts of retirement plans are made when you name a charitable organization of your choice as the beneficiary. This means that upon your death the organization would receive the proceeds and you’re estate will receive a charitable receipt. This receipt will counterbalance your final tax return, transforming any final tax liabilities you have when you die into a charitable gift.
A gift of annuity is made when you make a contribution of cash or other property to a charitable organization of your choice in exchange for a guaranteed lifetime income (or for a stated interval of time). It is an agreement or contract between you and your organization of choice. Upon death, the charitable organization of your choice would receive the remainder of the original contribution. Depending on the time elapsed the organization of your choice may get more or less than the original contribution. If an annuity is started when you are between the ages of 75-90 you can receive tax free income. If an annuity is started when you are between the ages of 65-74 you can receive partially tax free income. Where the income is totally tax free, you will receive a donation receipt equalling the initial amount of your contribution minus your expected annuity income.
Charitable remainder of trusts
A gift of trust is made when you decide to make a charitable organization of your choice the secondary beneficiary to an irrevocable trust. The primary beneficiary (or the income beneficiary) includes you, and if applicable, your spouse. Throughout your lifetime or for a stated period of time you will receive a predetermined amount of the trust; upon death the charitable organization of your choice will receive the remainder of the trust.
A gift of residual interest is made when you decide to give the property in which you reside or any other property (art, valuables etc.) to a charitable organization of your choice. You can continue to use and enjoy the property throughout your lifetime. You will receive a charitable tax receipt for the present value of the property when the gift is made. Upon death, the charitable organization receives the deed of the property.
A gift of real estate is made when you leave property, buildings, land, or a place of residence that you own to a charitable organization of your choice. This type of gift can be given immediately or specified in your will. You will receive a charitable tax receipt to be used in your final income tax return.
81% of Canadians contribute to charitable organizations throughout their lifetime. However, research shows that only 7% continue this support through a gift in their will or estate plan. We at the Kingston Humane Society would be pleased to assist you in planning for your legacy. We would be pleased to work with you and your financial/legal professionals so you can plan your charitable gift to provide the greatest benefit to you, your family and KHS. You may choose to make your gift during your lifetime or through your estate. You can also join together with a group of family and friends to create a named fund to honour or memorialize a loved one.
Talk to us to learn more about the options for planned giving:
- Life insurance
- Registered plans (RRSPs and RRIFs)
- Charitable annuities
- Charitable trusts
- Securities and mutual funds
- Named funds (expendable and endowed)