Many people who would like to make a substantial gift to charity cannot afford to part with assets during their lifetimes. Drawing up a will and directing a portion of one’s estate to charity is the most common type of future gift, but it is not the only way to give. Life insurance or retirement assets also can provide a future gift. A common characteristic of such gifts is that they are revocable: these future gift provisions can be changed at any time, should your circumstances require it.
It is estimated that only three in ten Canadians have a will, due to oversight, delay — or perhaps an extraordinary confidence in the government’s ability to deal with individual property! If you are among the many Canadians who leave no specific testamentary instructions, your lifetime accumulation of wealth will be distributed according to provincial law, which may not be the way you would have apportioned it. And if you have no heirs, the provincial government will receive your property as part of its general revenues.
Making a will need not be complicated, and it should be done with proper legal assistance. Providing for a gift to the Foundation or favourite charity in your will can be easily accomplished. Here are some examples of various forms of bequests, with appropriate wording:
A general bequest designates a certain dollar amount of property, usually cash, to the charity you select: “I give to The PPCLI Foundation the sum of $10,000 to be used for the general purposes of the Foundation at the discretion of its officers.”
A specific bequest directs that the charity is to receive a specific piece of property: “I give to the PPCLI Foundation 500 shares of XYZ stock.”
A residual bequest designates for the Foundation or charity all or a portion of whatever remains after all debts, taxes, expenses and other bequests have been paid: “I give to the PPCLI Foundation fifty percent (50 percent) of the rest, residue and remainder of my estate.”
A contingent bequest takes effect only under certain conditions: “In the event that my wife does not survive me, I give to the PPCLI Foundation the sum of $50,000.”
In addition to choosing the form of a bequest, you also have choices as to the purpose for which your gift will be used. Most bequests to the Foundation or charity are unrestricted, supporting its general purposes, but you may choose to make a restricted bequest directed to support a particular project, activity or program.
If you are planning a bequest, it is important to confer in advance with a representative of any charity included in your will to be sure that your wishes can be met and that your bequest provision is properly worded. Once you have completed your will, you should provide each beneficiary charity with a copy of the clause pertaining to your bequest. Your intention can be kept confidential, if you wish.
Tax Implications of a Charitable Bequest
When you make a bequest to the Foundation or charity, your estate is entitled to a gift receipt for the full value of the bequest. This can reduce significantly the tax payable when your final income tax return is filed. If the total bequest exceeds 100 percent of your income in the year of death, the excess (again, subject to the applicable limits) may be carried back to the preceding year, producing some credit for that year.
In his will, a widower leaves $100,000 to a registered charity and the remainder of his estate to his two children. Assuming the net income on his final income tax return is large enough for the entire bequest to be claimed for a charitable tax credit, the bequest may result in combined federal and provincial tax savings of approximately $46,000. If he had left the $100,000 to his children, taxes would have consumed that part of it, leaving them with $54,000.
You should consider giving your executor the discretion to choose the particular assets that fulfill the charitable bequest. If your executor is able to select listed securities for the charitable bequest and distribute cash or other properties to your heirs, only half as much tax will be payable on the gain in the securities.
Many individuals find peace of mind and satisfaction in knowing that they have provided not only for their immediate families but also for the charitable organizations that enriched their lives and those of others.
It’s yours when you write a will and include the Foundation. Your “present” will be a gift that endures far into the future.
Will Power—that’s what you have if you write a will! Power to use the accumulated fruits of your lifetime to provide for your loved ones as you see fit, rather than as the government determines. Power to ease the transition of your passing for those who survive you. Moreover, a will is fully revocable while you live — you retain control and can easily make revisions should your circumstances change.
When you include the Foundation in your will, you’re using your will power to help support on-going and future essential programs, activities and projects. Bequests enable the Foundation to build a solid funding base, which will support its work far into the future.
Where there’s a will, there’s a way
If you presently have a will, you can easily add a codicil providing for a bequest to the PPCLI Foundation. If you don’t have a will, this is the time to prepare one—and you’ll find that it is neither difficult nor expensive.
A bequest to the Foundation brings a tax benefit, too. At your death, your estate is entitled to a donation receipt for the full value of your bequest, providing a significant tax credit on your final tax return. For example, Margaret J., a widow, leaves $100,000 to the Foundation and the remainder of her estate to her two children. Assuming the entire amount is creditable and the combined tax credit is 45 percent, her bequest results in a tax saving of $45,000. If she had left the $100,000 to her children instead of giving it to the Foundation, taxes would have consumed $45,000, leaving the children with only $55,000.
Furthermore, it is quite likely that the entire bequest will be creditable. This is because the donation limit is 100% of income in the year of death, and the 100% limit also applies to any excess carried back to the prior year.
Making it fit your needs and goals
Your bequest may take any of several forms. Here are some examples, with appropriate wording.
A general bequest is for a certain dollar amount of property, usually cash: “I give to the PPCLI Foundation the sum of $100,000 to be used for the general purposes of the Foundation at the discretion of its Trustees.”
A specific bequest directs that the Foundation is to receive a specific piece of property: “I give to the PPCLI Foundation 500 shares of XYZ stock.”
A residual bequest designates all or a portion of whatever remains after all debts, taxes, expenses and other bequests have been paid: “I give to the PPCLI Foundation fifty percent (50%) of the rest, residue and remainder of my estate.”
A contingent bequest takes effect only under certain conditions: “In the event that my wife does not survive me, I give to the PPCLI Foundation the sum of $25,000.”
In addition to the choice of form, you also have options as to the purpose for which your bequest will be used. While most bequests to the Foundation will be for its general purposes (as in the first example above), you may choose to also make a restricted bequest to be used for a particular programme, activity or project of the Foundation, e.g. for use in the PPCLI Museum & Archives. You may specify that the principal of your bequest is to be held as endowment within the For the Soldier Legacy Fund from which only the income is expended, or establish a named fund in your name or as a memorial to a family member, friend or colleague. For any of these purposes, it is important to confer in advance with a representative of the Foundation to ensure that your wishes can be met and that your bequest provision is properly worded.
Legacy Gift Contribution
A gift in your will to the PPCLI Foundation is a wonderful way to build a legacy. If you have or are contemplating a legacy gift to the Foundation, please take a moment to complete this confidential form and return it to us.