There are a number of ways to make planned charitable gifts and much like other investments, each have their own risks and rewards. Before making a planned gift, you should consider your overall financial plan with your professional advisors.
A charitable bequest is simply a distribution from your estate to a charitable organization through your will. 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. A bequest to “The Cancer Society” might go to national headquarters, when you meant it to go to the affiliate in your community.
A gift of an appreciated security provides unique benefits to Canadian donors since donations of appreciated securities are exempt for capital gains tax. Often times, giving appreciated securities is much smarter than giving cash for this reason.
Life insurance can be used creatively to make charitable gifts. There are man different ways that life insurance can be used to make a charitable gift including naming a charity as the beneficiary or giving a policy to a charity directly. The best ways to use life insurance to make a charitable will depend on your individual circumstances.
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. Upon death, the charitable organization of your choice would receive the remainder of the original contribution.
Making a gift of real estate is similar to making a gift of appreciated securities. There are special tax rules that make giving appreciated real estate advantageous for donors. But the details should be considered with your professional advisors.