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.
Name that Charity!
“Name That Charity” sounds like a failed 1960s game show. Instead, it is an approach to estate planning that paradoxically may discourage charitable giving.
Wine and Estates Revisited
When I last wrote about wine and estates it was 2019. A distant epoch. The Canadian situation has changed dramatically since then. Not only have I been drinking more and better wine (I’m not alone), but the secondary wine market has changed. It’s more liquid, if you will. This is helpful to wine collectors and executors.
Better Life Insurance Donations
Recently I received an inquiry from a life insurance advisor about a client who wished to establish a policy and donate it to two charities. My colleague wanted to know if this was possible. In my experience it is possible, but not the best way to do it.
Illiquid Assets and Estate Donations
Tax relief for an estate donation cannot be claimed until the property is transferred to a charity. No tax receipt; no tax credits. If the distribution is after 60 months after death of the donor there is no tax receipt at all. But what if the estate has illiquid assets that can’t easily be monetized, but may, possibly, be transferred in-kind to a charity?
Direct Designation Estate Donations
A direct designation gift of RRIF or life insurance proceeds is an estate donation, but lawyers and executors have little or no role to play. Normal procedural and disclosure rules don’t apply. How do charities ensure they receive their intended gift? How does the estate receive its tax receipt?
Life Insurance Gifts Restructured
Life insurance is an effective way to make a significant future donation, but the unfortunate reality is that charitable policies have a high lapse rate. Thousands of policies have been donated since 1979 when the Canada Revenue Agency allowed premiums to be receipted. Sadly too few pay out to fund charitable programs.
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.
The Demanding Charitable Beneficiary
A few years ago, I met a couple who had served as co-executors for an aunt’s estate. This aunt had left a large residual bequest to three well-know charities. Her executors were quite bitter about the way the charities had handled the bequests. The charities had the temerity to question the executor fees and demand that there be a passing of accounts.
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?
Estate Donations, Time and Flexibility
Last week I visited Princess Margaret Cancer Centre in Toronto for a grant status update meeting with a family foundation. I used to work at the Princess Margaret Cancer Foundation, but left 20 years ago. Returning after two decades provided me perspective on two key charitable estate planning considerations: time and flexibility.
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?
Estate Donations for Charities not yet Registered
The 2018 Federal Budget hinted that Canadian newspapers may be able to receive charitable status in the future. As I’ve previously written, making non-profit and local journalism an eligible charitable purpose is a timely idea — and it has implications for donor planning their estates. The Federal Budget got me thinking of a charitable planning conundrum: donors who wish to support a cause that is not yet charitable at law and therefore not yet advanced by a registered charity.
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.