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Posted on Aug 2020 in Your Money

Leaving money to a charity? There can be a few ways to meet your needs

Choosing to leave some of your estate to a charity that’s important to you can be a wonderful way to ensure that your legacy lives on. This is typically something people can include in their last will and testament to ensure that their wishes are carried out.

An article in the Financial Post suggests there may be another way to leave money to your favorite charity, and here’s a few reasons why:1 

  1. Wills that have a very large amount of money earmarked for a charity can often be contested by family members. Whether or not those family members are successful, it can mean costly delays and a lot of drama.
  2. Depending upon the laws where you live, your income, and how much you’re planning to leave to a registered charity, it’s possible that you could potentially lose out on hundreds of thousands of dollars’ worth of charitable tax credits when you leave money to a registered charity in your will.
  3. If whatever money you’re planning to leave to charity is sitting in a non-registered investment account right now, chances are it’s currently being taxed. When it goes to your estate after you die, it may be hit with probate fees before it finally goes to the charity of your choice. Either way, you may be paying a lot of taxes and fees on that money before it ever gets to the charity you’re hoping to support.

 What’s the alternative?

To help avoid the issues mentioned above, the Financial Post proposes a combination of annual charitable giving so you can receive the maximum amount of charitable tax credits possible, and taking out a life insurance policy naming the charity as a beneficiary.

This can work for a few reasons:

  1. If structured properly, the annual premiums on the life insurance policy can be considered annual charitable giving so you get the tax benefit each year.
  2. The insurance policy can bypass the estate, so it’s paid directly to the charity and isn’t subject to estate battles by angry family members who want to contest the decision.
  3. The rate of return can be higher on an insurance policy than on other options, especially if you are in good health.

Obviously the choice is up to you, but simply leaving money to a charity in your will may not necessarily be the best way for you—or the charity you’re hoping to support. Please ensure that you speak with a professional advisor to ensure that your specific situation and needs are considered.

But of course regardless of what you choose to put in your will, it makes sense to ensure it is up to date, and Foresters has a new member benefit to help you do just that.

LawAssure is a complimentary, online document preparation service provided through Epoq that gives Foresters members access to customizable wills, powers of attorney, and healthcare directives from the comfort of their own homes. It’s convenient, easy to use, and helps you protect your family while planning for the future. Visit here to start using LawAssure.

SOURCES

1 https://business.financialpost.com/personal-finance/retirement/inheritance/leaving-money-to-charity-in-your-will-there-is-a-better-way

Description of member benefits that you may receive assumes you are a Foresters member. Foresters member benefits are non-contractual, subject to benefit specific Eligibility requirements, Definitions and limitations and may be changed or cancelled without notice.

LawAssure is provided by Epoq, Inc. Epoq is an independent service provider and is not affiliated with Foresters. Not available in Quebec, the Yukon, the Northwest Territories and Nunavut. Some features not available in Louisiana. LawAssure is not a legal service or legal advice and is not a substitute for legal advice or services of a licensed legal advisor. Foresters Financial, their employees and life insurance representatives, do not provide, on Foresters behalf, legal, estate or tax advice.

417957B CAN/US 08/20

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