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Demystifying
Charitable Gift Planning
With the legislative changes, the structure of
charitable giving can be just as important as the amount that is given, both
to the charity and to the client. The
options to the client are much broader than simply signing a cheque or
leaving a sum of money to a charity in a Will.
In many cases, a client needs professional advice to
assist in assessing the options. Many
clients are unaware of the giving alternatives. For professionals providing estate planning advice - whether
it is Will preparation, tax planning, assessing insurance needs, or
investment planning - it is becoming incumbent upon such advisors to include
a discussion of charitable giving.
Planned gifts can take many forms including:
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cash gifts and bequests,
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gifts of property,
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gifts of publicly traded securities,
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life insurance,
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charitable
annuities,
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charitable remainder trusts and
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gifts of remainder interests in property.
Professional advisors will often need to work
together with the charity to structure a gift that provides maximum tax
savings to the individual while providing effective assistance to the
charity.
The 100% of net income donation limit in the year of
death and in the preceding year may create a bias toward estate gifts.
However, this will depend on the size of the gift and the client's
net income for the relevant years.
The annual limit of 75% of net income provides
opportunities to increase lifetime gifts.
Each client's situation must be analyzed to determine which is more
beneficial: giving now or deferring the gift to the estate or a combination
of both.
Whether it is the donation of shares, capital
property, stock options, an insurance policy or the assignment of a policy,
there are numerous tax advantages available to donors.
Charitable donations should never be purely tax motivated but the tax
savings that can be achieved both in life and at death go a long way to
encouraging philanthropy and rewarding those who explore the numerous
opportunities available to them.
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