Planned Giving

What is planned giving?

Planned giving is the process of choosing gifts with an eye to realizing the donor's philanthropic objectives while maximizing the financial benefits. These financial benefits come largely from the treatment of charitable giving in the Income Tax Act. Many of the gift vehicles commonly used in planned giving have been available for many years and are quite familiar to most people. Bequests, trusts, life insurance and annuities have been used to make charitable gifts for decades, in some cases centuries. 

Planned giving is a form of financial stewardship. Most of our members know stewardship through their regular offerings. Compared to Sunday offerings, planned gifts: are made much less frequently, usually only once or twice in a donor's lifetime; come from accumulated financial assets, as opposed to income; are significantly larger in dollar value.

Types of Planned include:

• Bequests
• Gifts of life insurance
• Charitable gift annuities, either through the ELCIC or reinsured
• Lifetime gifts of cash, real estate, investments, etc.

Bequests

A bequest is a gift made in a last will and testament. Bequests are the most common type of planned gift, accounting for about 80% of all planned giving in Canada. Charitable bequests have the following characteristics:

• anyone with a will can make a bequest;
• they are revocable, that is the donor can change his/her mind at any time simply by revising the terms of the will;
• any type of property can be the object of a bequest, e.g., cash, investments, real estate, collections, art objects;
• a bequest clause in a will can name a specific piece of property, or can designate a share or percentage of the residue of the estate as the gift;
• they are open to public scrutiny, since all probated wills are public documents;
• they qualify for charitable gift receipts that can be used by the executor when filing the final income tax return on behalf of the estate.

Of course, having a valid will is a prerequisite to making a bequest. Most people agree that it is wise to consult a lawyer to have a will drawn up. The fee is usually not large for the preparation of simple wills that meet the needs of most people. It is a good idea to review one's will every few years, and change it if there has been a material change in one's wishes or circumstances.

Who should have a will? Virtually everyone. There are few circumstances when a person is better off not having a will. In fact, it is true to say that everyone has a will of sorts. Anyone who dies intestate (without a valid will of their own) comes under the sphere of provincial legislation. These laws contain a formula which governs how a person's property is distributed after their death. The question is, are you happy with that formula or would you prefer to write your own?

Gifts of life insurance

There are two ways a person can use a life insurance policy as a planned gift:

• naming a charity as the beneficiary of a policy;
• making a charity the owner of a policy as well as the beneficiary.

These two ways have a number of characteristics in common:

• a donor can use either an existing policy or a new one purchased specifically for this purpose;
• both term and permanent policies can be used;
• policies from virtually any company are suitable;
• the proceeds are paid at the death of the insured by the company directly to the beneficiary, bypassing the estate. Consequently, the gift is received quickly, in private and without being subject to probate fees.

However, the differences are worth noting.