Practical Financial Solutions: Give to Receive
By Roger Higgins
Give to Receive
Giving is a selfless act and a good thing — good for your community, your charities, and others who will benefit from your bounty. And, even though it’s not the prime reason you’ve decided to give back, giving can be good for you, too.
No matter the amount of your philanthropic gift, a sound charitable giving plan will make the best use of your contributions, preserve your legacy, and minimize taxes and/or estate fees. Let’s look at your options.
Name a charity as a beneficiary: In your will, simply leave a bequest of money or gift in kind (securities or artwork, for example) to a recognized charity and your estate will receive a charitable donation tax receipt that could reduce or eliminate the income tax on your final return and possibly on the immediately preceding return.
Establish a Donor Advised Fund: As the donor, you receive an immediate tax receipt for all contributions made to the fund and you also retain the rights to select the charities that are to receive your fund’s annual income.
Establish a Charitable Remainder Trust: This is an irrevocable trust that can hold assets such as cash or mutual funds. All the interest and dividends are paid to you as taxable income. Upon your death, the trust assets (known as the remainder) go immediately to the charity you have 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: This option ensures your charity will receive the total death benefit under the policy while you enjoy certain tax credits.
Donate publicly funded stocks or securities: You will pay no capital gains tax on the donated securities and will receive a tax receipt for their full value.
Establish a Charitable Life Annuity: You will continue to receive a lifetime income from the donated assets for yourself, or for you and your spouse. Much of the annuity cash flow is tax free and you’ll receive a charitable receipt for a portion of the donations based on the amount of annuity income you receive and your life expectancy.
Establish a Private Foundation: If your donation is very substantial, this option allows your name or family’s name to be permanently associated with the causes you’ve chosen.
Your professional advisor will help you establish a planned giving strategy that makes the most of your philanthropy for your charities and for you.
This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at roger.higgins@investorsgroup.com
