CHARITABLE GIVING AND ESTATE PLANNING
Many Canadians choose to include gifts to charities in their wills. Here are some tips on incorporating charitable giving as part of the estate planning process from Douglas Gray, author of The Canadian Guide to Will and Estate Planning ( www.estateplanning.ca).
Philanthropy is a noble cause, but family comes first. Ensure spouse and other dependents are adequately provided for in accordance with your wishes.
Ensure the estate has sufficient liquid assets to cover donations without forcing executors to liquidate others to raise cash.
Make sure that you identify the desired charity by its precise full legal name and include its address and phone number; lengthy and expensive court battles have been fought by competing charities in cases where there was confusion.
Ensure that the tax consequences of donations are duly considered. For example, if you own a Group of Seven painting or other asset deemed by the Canada Revenue Agency to have “outstanding significance and national importance to Canada,” donating it to a designated institution can result in favourable tax treatment, including an exemption for capital gains.
If you intend to make a substantial donation to one or more charities, consider making gifts during your lifetime under a planned giving program, which might produce better overall tax results than if donations only take effect after death.
Legislation varies from province to province on issues relating to wills and donations to private foundations. In British Columbia, for example, it is possible to challenge a will through the courts during the probate process in cases where the claimant feels the distribution of assets was not fair or equitable. One of the best ways to avoid this is to ensure heirs and dependents are informed and on the same page prior to the will taking effect, assuming of course that option is feasible or appropriate; family dynamics can vary considerably. Prior to any discussion with your family, make sure you have a consultation with an experienced estate lawyer.