Gifts in Wills
By giving even a small portion of your estate to charity, you can have a significant impact on the causes you care about
Charitable Bequests
Through a Will, one can direct the proceeds of his or her estate to beneficiaries – both charitable and non-charitable. A charitable gift in your Will, also known as a charitable bequest, is an opportunity to showcase your values and does not have to come at the expense of supporting your loved ones. In fact, charitable gifts in Wills can be used to offset income tax payable by your estate which increases the amount available for your other heirs.
There are four common types of bequests, each of which can be used to make a gift to charity. The choice will depend on the donor’s current situation, that of their heirs, and the cause(s) they wish to support.
Specific: either a specific amount or a specific piece of property which is usually paid out before any residual gifts
Restricted: stipulates that the funds should be used for a specific purpose
Residual: a share or percentage of the residue of the estate
Contingent: a “disaster clause” bequest that names an alternate beneficiary in case the terms of the original bequest cannot be met
To learn more, and for sample bequest wording, check out our Bequest Basics PDF!
Tax Treatment
At death, there is a “deemed disposition” of all capital property owned. This means that for tax purposes, property is treated as if it were disposed immediately before death and often generates a significant tax bill for the deceased and the estate. Also, unless there is a surviving spouse, the balance of any RRSP or RRIF is brought into income. Since 2015, gifts in the Will come from the deceased’s estate and not from the individual. However, the Graduated Rate Estate (GRE) can be used to claim a deferred tax credit on the deceased’s return. Therefore, the GRE is so important in planning a gift via the Will. For more detail on this please consult your tax and estate planning specialists.
Create Your Legacy with Benefaction
Charitable bequests are a powerful tool to extend your generosity beyond your lifetime and to create a meaningful legacy. Despite this, many Canadians don’t take advantage of giving in their Wills. A 2019 report from the Canadian Association of Gift Planners, showed that nearly 90% of Canadians have a Will by the age of 75, but less than 5% include a gift to charity. Some of the reasons for this are challenges in choosing which organizations to support and discussing decisions with family members.
Benefaction offers a solution to some of the challenges: flexibility. By naming your Donor Advised Fund at Benefaction as the charitable beneficiary in your Will, you can simply email us with a signed letter to update your bequest instructions (beneficiaries, amounts, etc.), without needing to update your Will which can often be a laborious, expensive process. This will allow you the ability to change your mind if you find a new cause or organization you wish to support. Most donors choose to establish the Fund in their lifetime so they can experience the joy of giving, and then they augment the Fund via a charitable bequest in their Will to create a legacy of support for the causes they cherish. Benefaction is here to help individuals across Canada achieve personalized and lasting social impact.