Planned giving 

12 July 2019

PUBLISHED JULY 12, 2019 - Recently, La Presse provided excellent coverage on philanthropy, and in particular on the matter of planned giving. Our adviser, lawyer Claudia Côté, gave an interview to Ms. Stéphanie Grammond, La Presse journalist. (Title of the article that appeared on June 23, 2019: À 5 % du bonheur ).
Here is some additional information for you. 

During the interview, our adviser explained that, as a planned giving adviser, she was part of the establishment and development of the Société de Saint-Vincent de Paul de Montréal’s planned donation program. The program offers different options to donors who want to establish a philanthropic project. These options include legacy gifts, life insurance donations, charitable annuity donations, company share donations and residual property donations.

Different types of planned donations

Ms. Grammond wanted more information about the different types of planned donations.

What is a legacy gift?

What is a legacy gift? It’s a donation designated in a will. A donor can choose to make a donation to the charitable organization of their choice by designating it in their will as “specific legatee” or as “residuary” or “universal” legatee. Ms. Claudia Côté explained that it is often simpler and quick to make a donation to a charity by designating it is a specific legatee, e.g. I bequeath, by particular title, to the Société de Saint-Vincent de Paul de Montréal, the amount of $2,000. With this type of bequest, the organization will receive the sum more quickly and will not be placed at the same level as heirs termed “residual”, with all the attached legal obligations. Another option is useful for donors who are not sure what assets they will have when they die. They can choose to bequeath a percentage of their assets at the time of death to their favourite organization. This option can be reassuring and can prevent unwelcome surprises since we can’t always predict life’s ups and downs. In this way, no matter the value of assets remaining in the donor’s estate, there won’t be a financial surprise.
Ms. Grammond asked about the reasons that someone would want to make a donation in their will. Ms. Côté responded that several factors can be the motivation. The legacy bequest or similar donations (such as the life-insurance bequest) is the “ultimate” donation made by a donor. Why? Because it is our last statement. When we decide to make our last will and testament, we often think of what charitable organization we most support, in order to pass on our values beyond our life, to generations to come, in order to ensure the mission in which we believe can continue.
What is a life-insurance donation?

A donor has several options. You can make this kind of donation to benefit from income tax credits while you are alive, although the donation is only made at death. How? By transferring ownership of your life-insurance policy to the charity which will also be its beneficiary, but continuing to pay the annual premiums, if any. The donor receives a tax receipt for a donation equivalent to the amount of the annual insurance premiums that they continue to pay. If the life-insurance policy is donated, the organization becoming the owner will provide a receipt for a donation equal to the market value of the policy. The life-insurance policy donation is not well known and people unfortunately have the impulse to cancel a life-insurance policy when they think they no longer need it. Instead they can use it to help a charitable organization and receive an income tax benefit at the same time.
The Société de Saint-Vincent de Paul de Montréal has implemented a complete program for company share donations, charitable annuity donations, and residual property donations. Interest in these options is growing from year to year.
Each type of planned giving has its own tax advantages. No matter which is chosen, depending on their values and financial reality, donors can receive income tax benefits and help ensure that the charity’s mission can continue to be met.
If each Canadian, or even just each Quebecer, would include a $100 donation to their favourite charity, billions of dollars would flow to such organizations and all of society would benefit.
That’s why we all have the responsibility to think about this. In any case, we can’t take our assets to heaven. Planning a donation in a will gives the donor the power to decide how amounts will be shared among your favourite charity and your income tax bills.

Me Claudia Côté, Attorney
Planned giving senior adviser
Société de Saint-Vincent de Paul de Montréal