Leaving a Legacy in Uncertain Times

Charity isn’t Just for the Wealthy, and It’s not just for the Good Times

Lately, whenever I bring up estate and legacy planning, I get one of two responses. 

1-     Isn’t that what the wealthy people do? I don’t think I have the kind of assets that would warrant anything like that.

2-     During a pandemic? Shouldn’t I focus on myself and make sure I’m not one of the people who needs help?

Honestly, I understand the questions and the concerns. And the fact is, we live in a wonderful country with an excellent social safety net. But there are still some very important needs that the government cannot completely meet, either for ourselves or for the people and causes we care about. By all means, take care of yourself and your loved ones but a some point it pays to look beyond your own back yard and do your part to help the most vulnerable.    

The government does provide a lot of support, but sometimes people need more. Food banks, medical research facilities, environmental organizations, these places can’t do their vital work on government handouts alone. That’s where you come in, while some of us are able to provide periodic gifts to worthy charities, others need to hold back our accumulated wealth just to survive through lean times and have enough to manage in later life. It is important to remember that each of us regardless of our current situation can leave an important and lasting legacy in our Will. 

You don’t have to be wealthy to make a difference. Every little bit helps, as they say, and a legacy can be so much more than money. Volunteering time and expertise can be worth more and as we age and move into retirement we often gain back our time in ways we couldn’t imagine, perhaps gifting yourself to a charity is the best way for you to give something to a worthy cause instead. 

But if you have some accumulated investments it is important to consider what the Canada Revenue Agency provides as advantages for certain types of giving. 

For example, if you own company stocks when you die your estate must pay capital gains but if these same stocks are gifted to a charity in your Will the charity can give a receipt for the full value while the estate does not have to declare the capital gain. Check with your accountant before putting this in your Will, as there may be other things to consider but for Canadian Controlled Corporations this is generally true.

Life Insurance policies are another great way to leave a legacy after you have passed away. Many of us purchased Life Insurance policies when we were younger to protect our families. Now that the children have grown the need for this coverage may have dissipated and it might even be fully paid up. Rather than cash it out and pay tax on the gains, it is possible to name a charity as the beneficiary or transfer the ownership of that policy to a charitable organization now and receive a tax receipt for its full cash surrender value. The charity can then either hold on to it until you pass or cash it out early to fund a current need, once they own the policy it’s up to them what to do with it. 

Of course, I am not a lawyer so any moves that affect your Will and estate taxes should be handled with expert legal and accounting advice. But these general strategies are great ways to leave a legacy and benefit your favorite causes even if you aren’t wealthy and while we are dealing with the ongoing fallout of a global pandemic.