Making charitable giving part of your estate plan can create a significant philanthropic legacy with minimal impact on the financial inheritance available to your family. The tax dollars you save can be used to build your charitable legacy.

At the time of death of the last surviving spouse, all capital assets, including publicly traded shares, mutual funds, bonds, RRSP, RRIF, LIRA, real estate holdings, and jewellery will be deemed for tax purposes to have been sold at their fair market value. This event will trigger taxes, including capital gains taxes. Charitable donations provided for in your will create tax credits that can be used to offset the taxes due on these deemed dispositions, allowing you to create a philanthropic legacy, reduce taxes owed, and still leave the vast majority of your financial legacy to your family.

The JCFC’s Legacy Calculator demonstrates this concept. By “plugging-in” readily available financial information, this easy to use tool creates a snap-shot of your estate, showing how planning your giving could reduce the taxes your estate may owe. JCFC does not have access to any of the financial information you input – the details of your financial plan remain private. If you and your family would like to learn more, we would be pleased to meet with you and your financial advisors at your convenience.

To utilize the calculator you need to gather some information including:

  • The value and nature of the assets you anticipate will be in your estate. This includes publicly traded shares and mutual funds, holdings in registered accounts such as a RRSP, RRIF, LIRA or LIF as these must be brought into income in the year of death, the market value and adjusted cost base of any privately held corporations, and the value of real estate holdings. Anticipated taxable income in the year of death.
  • The value of debts and liabilities that must be paid from the estate.

Planning the details of your charitable gift ahead of time will help to ensure the best possible results. At present, Canada Revenue Agency requires that provisions for charitable donations be explicitly stated in the donor’s will in order to generate charitable donation tax credits.

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 Disclaimer: The “Legacy Calculator” is an educational tool designed to help you evaluate the potential benefits of using planned giving solutions such as an endowment fund as part of your estate plan. The Calculator provides an estimate of the taxes that will be due (including current year Canadian federal and Alberta provincial taxes) at the time when the assets will not transfer to a surviving spouse or partner on a tax-exempt basis. The Calculator does not account for specialized tax treatments and charitable deduction limitations which may apply in individual circumstances and which may lead to materially different results. For this reason, the Legacy Calculator should not be used as the primary basis for making tax or charitable giving decisions, and you should consult with an attorney or a tax planning professional regarding your specific legal and tax situation. The information contained herein is general in nature and not intended, and should not be construed as legal, accounting, tax, or investment advice.