Combination Gift Plans
Combining estate plans and lifetime financial plans can be challenging, especially for individuals who have dedicated a significant portion of their estate to charity, for example 50% or more. Wills are often drafted independently of lifetime financial plans. The drafting lawyer may not ask the question “is it prudent and advantageous to start giving major gift during life?”. In certain situations, there are significant tax and philanthropic benefits to start estate donations during life.
The Endowment Effect
People value objects more when they own or possess them – or at least when they presume ownership. In cognitive psychology this phenomenon is called the “endowment effect”. It’s a concept that was seemingly invented to describe a lot of behaviour related to estates, philanthropy and foundations. It’s time to give it a name.
Robert and Signe McMichael’s Complicated Legacy
Robert and Signe McMichael, the namesake of the McMichael Canadian Art Collection, were savvy art collectors who made some painful philanthropic and estate planning mistakes.
Intrinsic v. Extrinsic Giving
There is a fundraising truism that says you don’t get money unless you ask for it. But estate planning professional know that’s not always true.
Donate to Eliminate Clauses
Last week I received a call from a client who wished to include a “donate to eliminate” clause in his will. His goal is to wipe-out all taxes in his estate by giving just the right amount to his favorite charities…
Donations from Spousal and Other Trusts
The issue: how can a testamentary spousal trust or an alter ego trust be drafted to enable a residual gift to charity be eligible for a tax receipt?
Residual Interest Gifts of Homes
Can you donate the residual interest of a principal residence to charity? Absolutely! The question, however, is not can it be done, but should it be done. In most cases, the answer is no – especially for the charity.
Restricted gifts of real estate
When I was a young charitable gift planner, my charity was offered a cluster of islands on Georgian Bay. Surrounding the 100-year-old family cottage were sheds, cabins and boat houses. The donors had a vision: it would be a children’s camp.
How long is perpetuity?
“Is perpetuity 21 years?”, asked a charity colleague. “Well, no, it’s forever. Or until the end of time, or as long as we collectively exist,” I answered. Despite my emphatic response, the question is a good one because it underscores the inherent meaninglessness of the phrase “in perpetuity” in relation to charitable donations, trusts and endowments.
Gifts of RRIFs in Life
I get a steady flow of inquiries about donating funds from registered retirement income funds or RRIFs. The value of RRIFs has grown through careful saving and market gains, and occasionally these funds represent surplus wealth. Some RRIF holders resent the requirement to take steadily increasing annual withdrawals from their RRIF. Add a dash of altruism and the idea of donating RRIF property arises.
Donation Tax Credit Mismatch
It is a truism that Canadians who donate enough to charity at death can eliminate tax. This outcome is due to the 100% contribution limit for gifts by will and direct designation gift of registered funds and life insurance. Since 2015, however, Ontario, Quebec, New Brunswick and Yukon have increased the top marginal tax rate, but not top donation tax credit rates.
Gifts of RRSPs/RRIFs by Direct Designation
Directly designating a charity as the beneficiary of a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) has a number of advantages, but also a risk.
Get the Will Done!
Years ago I worked at a charitable foundation of a large cancer hospital. One day I was visited by an older patient who wanted to donate shares owned by his late wife. He was her executor and sole beneficiary, and two years after her death he had not initiated the administration of her estate. Clearly overwhelmed, he believed a gift would help simplify his life and generate some tax savings. In addition, he wanted to leave the residue of his estate to the foundation.
Start at the End
Estate planning is a process that should “start at the end”. Who are the beneficiaries? What do they get, and when? All too often, however, we start in the middle. The focus is on the mechanics of making the transfer: probate fees, taxes, structures.
Is it a Gift by Will?
Recently a charity contacted me about a long-time supporter who had just died. The late donor intended to make a bequest of valuable artwork, but the gift was not mentioned in her will. The family and executor were willing to donate the art on the condition that the charity provides a receipt to the estate. Should the charity do it?
Charitable Bequests and Stock Market Turmoil
Tumbling stock markets always stir up anxieties. This is certainly true for charities that depend on donations, as well as for the donors who give to them. One type of donation that is remarkably unaffected by market roil is the bequest.
Wine and Estate Planning
I recently went looking for information to assist wine and spirit collectors with their estate planning. To my surprise there is little material online. It’s easy to uncovered truth by drinking wine – “in vivo veritas” – but much harder to find a comprehensive Canadian resource about estate planning for collectors.
My Digital Afterlife
If I was to drop dead after writing this blog, what would happen to it and all my other detritus in hyperspace? My photos? My Facebook account? My YouTube channel filled with my oddball movies? Is it part of my estate? What are the responsibilities of my executor?
Donor Advised Funds are iPads, Testamentary Charitable Trusts are Commodores
The iPad, Apple’s touch-screen tablet, is a device that exemplifies innovative technology. The trust world is slower at introducing novel technologies, however, innovation does occur. The donor advised fund is an example.
The Terror of Giving Up (2006)
We're always told to address the donor's objections. It's a natural part of the gift-planning process. First we listen; then we assess; then we present a thoughtful, appropriate plan meeting the donor's aspirations and needs. But occasionally the process grinds to a halt. Paralysis hits, and the donor becomes incapable of implementing the gift.