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Charitable Gifting


Give substantial amounts to your favorite charity and still maintain your assets for your family. Clients have the satisfaction of charitable gifting with the following advantages:

  • Gift is much larger than available with current assets
  • Gift is separate from estate assets and excluded from estate settlement costs, i.e., legal and probate fees
  • Income tax credits are available, either for donations during lifetime or in the estate
  • When structured properly, your client can maintain complete control. A switch to a different charity can be made if needed.

Your client establishes an insurance policy with the life insured as the client or client and spouse. The charity is owner and beneficiary. The charity issues charitable donation receipts for the deposits made, for your client to claim a tax credit. The insurance proceeds are paid directly to the charity, outside of the estate and with no tax implications. Estate assets remain for your client’s heirs, however, depending upon the assets, substantial taxes in the year of death may apply.

An alternative is for your client to be owner with the charity as beneficiary. Under this arrangement, your client maintains complete control of the policy. For example, if circumstances change, the beneficiary can be changed to another charity, or additional charities named, or proceeds shared with heirs. The charitable donation receipt is issued when the charity receives the insurance proceeds as beneficiary, and the receipt is in the deceased’s name. The receipt can offset special taxable items incurred due to death, for example, deemed capital gains on capital properties such as a cottage and investments, and the value of RRSPs and RRIFs. These assets are preserved for your client’s heirs, the selected charity receives a substantial gift, and income tax in the estate is reduced. The recommended insurance plan is a Universal Life policy – either increasing insurance pattern with level insurance costs or minimized insurance pattern with yearly renewable term costs to offer maximum investment opportunity. The minimized insurance pattern is attractive when your client retains policy ownership. Tax-advantaged investments accumulate with minimal insurance cost and can be accessed by the client if desired, for example, as leverage for bank loans.

    Ideal Client
  • Now giving to charity and desires to give substantially more
  • Client with substantial charitable bequest presently in the will. Insurance is an economical method to fund the bequest with tax credits either during lifetime or in the estate.
  • Client with assets that will incur substantial taxes in the estate, e.g. RRSPs and capital gains. A charitable gifting program can redirect funds from taxes to the chosen charity. The charity, rather than the government, receives the funds.
    Suggested Approach
  • For a client presently giving to charity:
    You recognize the worthwhile achievements of your chosen charity. There is a way that you can help further by giving a substantial bequest without affecting the amount you intend to give to your heirs.
  • For a client with substantial RRSPs or other assets, who wishes to give to charity:
    Before your assets pass to your heirs there will be considerable taxation. Rather than your estate paying tax, there is a way that you can redirect this tax from the government to your chosen charity.

For more information on how to personalize based on your own situation contact FSE Financial Group Broker at 403-253-7007

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