Financially Speaking

There’s no place like home – and there’s no better place to begin your charitable giving. This is the time of year when we think of family and all the good things we have. It’s also a time when we think of others who may not be so fortunate and how we can give back to the many worthy causes close to home and across the country through charitable acts and donations. Large or small, every philanthropic gift is important. Here’s how to make the most of your giving while minimizing taxes and other estate fees.

Name a charity as a beneficiary The simplest option. In your will, simply leave a bequest of money of gift in kind (such as securities or artwork) to a recognized charity. Your estate receives a charitable donation tax receipt that could reduce or eliminate the income tax on your final tax return and perhaps the immediately preceding return, as well.

Establish a donor advised fund – As the donor, you receive an immediate tax receipt for all contributions made to the fund and retain the right to advise the charity on how to use fund income.

Establish a charitable remainder trust – This is an irrevocable trust that holds assets such as cash or mutual funds. The interest and dividends are paid to you as taxable income and upon your death, the trust assets – the ‘remainder’ – go to the charity you designated. When the trust is established, you receive a donation receipt for the ‘remainder interest’ of the trust.

Donate a life insurance policy while you live – Your charity will receive the total death benefit under the policy and you will enjoy certain tax credits.

Donate publicly funded stocks or securities – You will receive a tax receipt for their full value and will not pay tax on the capital gains in the donated securities.

Establish a charitable life annuity – You will receive a lifetime income from the assets you donated for yourself, or for you and your spouse. Much of the annuity cash flow is tax-free and you will receive a charitable receipt for a portion of the donations based on the amount of the annuity income you receive and your life expectancy.

Establish a private foundation – If you’re making a substantial donation, this option allows your name or your family’s name to be permanently associated with the causes you’ve chosen.

Give the gift of your time – In addition to, or instead of giving donations directly to charitable organizations, you can take a more direct and active role as a volunteer – and your time and talents can be even more valuable than writing a cheque.

You want to give and that’s good. Your professional advisor can help you establish a charitable giving plan that works best for you and the causes you wish to support.