Planned Giving - Leaving A Legacy

By Judee Fong


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FEBRUARY 2007 EDITION OF SENIOR LIVING MAGAZINE VICTORIA BC

"From a tiny acorn grows the mighty oak." Like the acorn in this old maxim, regardless of the size of a bequest, it can grow into a lasting legacy.

The Community Foundation of Canada lists a number of reasons why people include bequests to registered charitable foundations in their wills: A personal and positive experience with a specific organization; a wish to remember a friend or relative; a need to help others less fortunate; a desire to give back to the community and the bonus of tax benefits.

Financial advisors often hear the same question, "Shouldn't I leave my entire estate to my children and relatives?" Depending on the current tax laws, adding a bequest to a favourite charitable organization can reduce the final personal taxes owing after death.

Financial/tax advisor for KPMG David Denley says, "The simplest way to leave a bequest is in your will, naming the charitable organization with the specific dollar amount they are to receive. Be sure the organization or foundation is a registered charity that can issue receipts. B.C. has no estate taxes but there is a probate fee. The value of all your assets, at the time of death, will be taxable income on the final tax return. Your estate will benefit from a tax-deductible charitable bequest."

Other kinds of bequests may be an insurance policy or an RRSP naming a charitable organization as the beneficiary.

A charitable remainder trust is another source of income one might consider bequeathing to an organization. This type of trust allows the donor to retain the income and receive the tax benefits for life, but upon death, the remainder passes to the designated charity. This type of trust cannot be taken back, is not subjected to probate fees and is not included in the value of one's estate. The tax savings can be substantial.

Another bequest may involve securities such as real estate, mutual funds, stocks and bonds. Due to federal tax changes in May 2006, the 50 per cent capital gains tax on securities was eliminated, if it was given as a charitable donation. This has generated significant tax benefits for donors.

Lastly, an endowment is a gift made in life or bequeathed in one's will that provides an ongoing source of income to the designated charitable organization. Remember, always consult an estate planner or financial advisor to learn how planned giving works in the patron's advantage - whether in the present, when people can reap the benefits of a tax break, or after their death, when their estate benefits.

The story of Burges Gadsden and the Victoria Foundation illustrates how one man made a difference. During the Depression, Burges struggled to keep Victoria's only soup kitchen, the Sunshine Inn, operating. At the same time, he had a vision of forming a foundation, funded by donations that would go back to helping the community. In 1936, the B.C. Legislature established the Victoria Foundation, making Burges' dream a reality. In 1937, the Foundation received its first donation of $20 from Burges' mother. Despite its slow start and almost forgotten existence, the Foundation accumulated $7,000 by 1969, and gave out grants for community use. Today, the Victoria Foundation is the second oldest and one of the 10 largest community foundations in Canada.

Donations to the Victoria Foundation are invested, creating a lasting endowment fund that benefits the community. Like the tiny acorn, a small start of $20 grew to $90 million with monies distributed to healthcare, education, research, arts, music and sports. Some of the diverse organizations under its umbrella are B.C. Cancer Foundation, Camosun College Foundation, Canadian Guide Dogs for the Blind, Greater Victoria Eldercare Foundation, United Way of Greater Victoria, MS Society Tomorrow Fund and Pacific Opera Foundation.

"The Foundation also researches where community needs are greatest," says Sandra Richardson, CEO of the Victoria Foundation. "At present, the homeless is one area of deep concern. After talking to city officials and shelters, we have suggested to our donors, giving a grant to help."

For seniors, the bewildering maze of estates, trusts, wills and bequests can be confusing. Elder Planning Counsellor, Julia Jenkins explains her role in helping untangle the labyrinth. "I gather all the facts regarding a person's estate, likely tax liability on death, needs of dependents and considering other laws that impact on what can or should be done through a will or through a trust, I write a report and recommend how to proceed."

Jenkins and her client then review all the options, drafting a will or trust proposal for a lawyer's final legal document. As a member of the Canadian Association of Gift Planners (CAGP), Jenkins explains to her clients the importance and benefits of planned giving. Later, Jenkins remains with her client and the lawyer, ensuring a clear understanding of her client's wishes.

CAGP, a national organization, brings together professionals from various disciplines to ensure a donor's bequests go to the charitable organization closest to the donor's heart.

LEAVE A LEGACY is a licensed public awareness program under CAGP.

"LEAVE A LEGACY encourages people from all walks of life to make gifts through a will to the registered charities of their choice," says spokesperson, Peter Walmsley of Victoria's Gurney Walmsley Group. "We assist the public by directing them to the appropriate adviser such as financial estate planner, lawyer, notary public, trust officer or insurance agent to get the maximum tax and legal advantages allowed for their gift."

Members all work towards educating the public on the importance of planned giving.

Peter Chipman, Director of Planned Giving for Variety - The Children's Charity of B.C., which endorses LEAVE A LEGACY, says since Variety's creation 16 years ago, generous donors have made bequests in their wills totaling $16 million dollars.

"This represents a large percentage of our annual fundraising revenue and enables us to help many more children who have special needs in British Columbia."

Along with hundreds of British Columbians, notable bandleader Dal Richards has left a bequest to help the province's special needs children. He believes in the work Variety does.

"I have been supporting Variety for almost 40 years with my Big Band music," said Richards in an earlier interview. "Because of the bequest in my will to Variety, I will be able to continue to support B.C.'s children who have special needs long after I am in Big Band Heaven."

People, who cared enough to include bequests to charitable foundations in their wills, leave a legacy of financial assistance and hope.

"Bequests to The Canadian National Institute for the Blind (CNIB) represent a commitment to thousands of individuals who turned to the CNIB each year when they experience significant vision loss," says Sylvia Zylla, CNIB Associate for Corporate and Personal Giving. "We work in the community providing programs and services to visually impaired children, students, working age adults, seniors and their families."

Donors can specify where their bequests may be used, designating specific areas such as orientation and mobility, independent living skills and others.

Charlotte Lawson, Director of Development and Legacy Giving for the Nanaimo and District Hospital Foundation says, "Regardless of the size of the bequest, they are important for it provides us with the capability to purchase vitally important equipment, services or special training that wouldn't have been possible without this gift."

Lawson tells the story of Edith Lenhart who wanted to provide a "quiet place" for families to meet while visiting their loved ones in the hospital. Coincidentally, the hospital was undergoing a major renovation resulting in a vacant open space at the end of each ward, near the new public elevator. Since there were no plans to use this space, the hospital asked for funding to provide furniture for the five spaces. Thanks to Edith Lenhart's legacy, the Foundation was able to furnish five "quiet places," used by patients' families.

Planned giving is more than giving money to a worthy cause; it's a legacy from the heart and a gift of caring for future generations.

Tips for Planned Giving

- Be sure the charitable organization is registered and will provide receipts for tax purposes.

- When making a bequest, be sure the organization is correctly named and differentiate whether it's local or national (i.e. BC Cancer Foundation-Victoria or Canadian Cancer Society).

- If you name a charitable organization as a beneficiary in your insurance policy or elsewhere, be sure to mention this in your will.

- If you have a large bequest, it will be helpful to include the planned giving/legacy person from your chosen charity in your discussions with the estate planner or financial advisor.

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