Planned Giving
You can create a powerful legacy with a planned gift that will ensure a secure future for the University of Ottawa Heart Institute. Your contribution will help in our quest for new research discoveries and innovative treatments to continue lowering the mortality rate from heart disease.
There are a number of easy ways to leave a legacy to the Heart Institute that offer your estate considerable tax credits. Simply designate the Heart Institute as a beneficiary of one of the following:
Or use one of the following forms of gifts to accrue immediate tax relief while guaranteeing life-saving resources to the Heart Institute:
- Appreciated Securities
- Letter of Direction
- Life Insurance Policy Transfer of Ownership
- Charitable Trust
For more information or to have a confidential discussion, please contact Josee Quenneville at 613-761-4524, or email.
Download Bequest in Your Will (pdf)
We cannot say enough about the importance of having a will.
Although it is difficult for most people to think about, death is certain for all of us, and without a will, our provincial laws take over as to who gets what from your estate when you pass away. The laws are not flexible. The people whom you want to benefit from your estate may be left out, and the people who do benefit may not be those you would have chosen. If you have no living relatives, your whole estate goes to the provincial government.
The process of preparing a will allows you to look at all your financial and other possessions and make arrangements to provide for your family and others once you pass away. It also helps you avoid paying unnecessary taxes.
You do not need to be rich to do estate planning. Anyone with a few assets and a family has an estate.
Bequests are gifts that you leave through your will to your beneficiaries.
Each year, thousands of people, regardless of their income or assets, designate charitable organizations as beneficiaries of portions of their assets. A well-planned charitable bequest will enable you to make a larger gift than you would have been able to make while living, and allow you to receive a tax receipt to reduce your estate’s income taxes. There are three types of bequests:
- A specific bequest is a gift of a sum of money or particular property (such as securities).
- A residual bequest is a gift of a portion, or the balance of, your estate once all expenses, debts, taxes, and other bequests have been paid out.
- A contingent bequest is a gift that takes effect only if the original beneficiary of the gift does not survive you.
Tax Benefits of a Charitable Bequest
Revenue Canada considers a charitable bequest as a gift made in the year of death. You are allowed to give charitable gifts of up to 100 per cent of your net income in your final year. Any excess can be carried back to the previous year to save on that year’s taxes, also allowable up to 100 per cent of your net income for that year. (Your net income in your final year can be quite high because, if you are not survived by a spouse, your assets, like your RRSP or RRIF and other investments, are considered cashed and become part of your net income, which is taxed.)
Here are two examples of tax benefits. Please note that these examples are for illustrative purposes only. Because each individual’s financial situation is unique, please consult with your legal or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
Example 1: Gift of Cash
Charitable bequest (assuming no other charitable gifts ) = $200,000
Tax payable—Final year:
Donor’s net income = $175,000
Minus: Tax credit for donation (100% x $175,000 net income) = $175,000
Tax payable = $0Tax payable—Previous year:
Donor’s net income = $70,000
Minus: Amount carried back to previous year ($200,000 bequest – $175,000 tax credit in final year) = $25,000
Taxable amount = $45,000
Tax payable (assuming 50% rate x $45,000) = $22,500
The income tax for the final year is totally eliminated, and it is substantially reduced in the previous year, allowing the donor’s heirs to benefit from the tax savings.If a gift was not made, the donor would pay $122,500 in taxes in those two years (assuming a 50 per cent tax rate). Therefore, the gift of $200,000 actually cost only $100,000.
Example 2: Gift of Listed Securities Versus Cash
If the donor’s estate consists of appreciated listed securities as well as cash, it is more beneficial to donate the securities and give the cash to the heirs because of the preferential tax treatment for donations of securities. The following example illustrates that there is a net tax savings of $18,400 in making a bequest of securities of $100,000 market value (with a $20,000 cost base, leaving a capital gain of $80,000), versus a cash bequest of $100,000. The donor’s income tax rate and tax credit rate are assumed to be 46 per cent.
Securities bequest (cash given to heirs):
Tax credit (46% x $100,000 market value) = $46,000
Minus: Tax on capital gain = $0
Net tax savings = $46,000Cash bequest (securities given to heirs):
Tax credit (46% x $100,000 cash donation) = $46,000
Minus: Tax on capital gain 46% (50% x $80,000) = $18,400
Net tax savings = $27,600The tax savings to heirs ($46,000 – $27,600) = $18,400
Download Life Insurance Policy (pdf)
A gift of life insurance enables you to make a significant contribution to the Heart Institute at a small cost, while allowing you to receive tax benefits in the process.
- Have you wanted to make a large gift to the Heart Institute, but cannot afford to?
- Do you have an existing policy on which premiums are owing, and you have achieved financial stability that the policy is no longer needed?
- Do you have a paid-up policy that your beneficiaries do not need any more?
If your answer is “yes” to any one of those questions, you may want to consider a life insurance contribution to the Heart Institute. Create a substantial legacy with a minimal outlay of cash!
By naming the University of Ottawa Heart Institute Foundation as the beneficiary of all or a portion of your life insurance policy, your estate will benefit from a charitable tax credit.
Here is an example that shows how you can designate the Heart Institute as a beneficiary of a life insurance policy. Please note that this example is for illustrative purposes only. Because each individual’s financial situation is unique, please consult with your insurance or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
Example: Name the Heart Institute as a Direct Beneficiary of an Individual Policy or a Policy of a Group Plan:
Chris earns a moderate income and is leaving all his assets to his family upon death to ensure their financial security. Chris also wants to leave a major contribution to the Heart Institute to show his gratitude for the care that his father received. He is able to do so by designating the University of Ottawa Heart Institute Foundation as a beneficiary of his group life insurance policy offered in his benefits package at work.
The benefits to Chris and his family are:
- His estate will receive a charitable tax receipt for the value of the contribution.
- The insurance proceeds will not form part of Chris’ estate and will be free of probate fees.
Chris will also receive the same benefits by designating the Heart Institute as a beneficiary of a policy for which he is the policyholder and the life insured.
Download RRSP or RRIF (pdf)
Gifts of all or portions of RRSPs and RRIFs are particularly beneficial for donors who are single, without dependants. If an individual dies without a surviving spouse or qualifying dependants, the value of the RRSP or RRIF is taxed as ordinary income in the year of death. The estate could pay up to 46 per cent of the value in taxes, depending on the tax rate of the deceased individual.
A charitable tax receipt can help offset taxes payable on the RRSP or RRIF if some or all of the money was donated to charity. The donor would simply name the charity as the beneficiary of all or a portion of the RRSP or RRIF, or name the estate as the beneficiary of all or a portion of the RRSP or RRIF and put a clause in the will with directions to donate it to charity.
Here is one example. Please note that this example is for illustrative purposes only. Since each individual’s financial situation is unique, please consult with your legal or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
Example
Bob is retired and is a widower with adult children. He draws an income from an RRIF worth $200,000. Wanting to make a substantial contribution to the Heart Institute, he decides to name the University of Ottawa Heart Institute Foundation as beneficiary of 30 per cent of his RRIF. He designates his children as beneficiaries of the balance of his RRIF. Assuming that there will be $100,000 remaining in his RRIF when he passes away, his contribution of $30,000 will be sent to the University of Ottawa Heart Institute Foundation.
The benefit to Bob’s estate is:
- His estate will receive a charitable tax receipt for $30,000 to offset the tax paid on $30,000 of the RRIF that was donated to the University of Ottawa Heart Institute Foundation. The portion that goes to his children will be fully taxed at Bob’s tax rate.
Download Appreciated Securities (pdf)
Donations of listed securities, over cash donations, are particularly attractive because of the tax benefits.
Do you have stocks, bonds, or mutual funds that have increased significantly in value since you purchased them?
If you sell the securities and keep the cash from the sale, you will be taxed on 50 per cent of the capital gain. However, if you donate the securities to a public foundation like the University of Ottawa Heart Institute Foundation, you will not pay any capital gains tax! You will also receive a charitable tax receipt for the fair market value of the securities that will offset most or all of the taxes. You may claim your charitable tax credit over six years, including the year the gift was made.
The following examples show the actual cost of a contribution of securities versus making a donation of cash. Please note that these examples are for illustrative purposes only. Since each individual’s financial situation is unique, please consult with your legal or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
Example: Gift of Securities Versus Donating Cash
Mr. and Mrs. D are regular donors to the Heart Institute and have been considering a large contribution. They had purchased some stock earlier for $40,000 that is now worth $100,000, resulting in a capital gain of $60,000. Their income tax rate and tax credit rate are 46 per cent.
Gift of Cash Gift of Shares Gift (market value) $100,000 $100,000 Tax credit: • Federal/provincial tax $ 46,000 $ 46,000 • Reduction in capital gains tax* n/a $ 14,000 Total tax benefit $ 46,000 $ 60,000 Cost of donation $ 54,000 $ 40,000 By giving a gift of stock instead of cash, Mr. and Mrs. D saved $14,000 in taxes!
* This is the savings in capital gains tax that they would realize by not selling the shares.Example: Bequest of Securities Versus Cash Bequest
Mary’s estate consists of appreciated listed securities as well as cash. She has been considering leaving a bequest through her will to the University of Ottawa Heart Institute Foundation. She bought the securities for $20,000 a number of years ago. Assuming that the market value of her securities will be $100,000 when she dies, they will have gained in value by $80,000. Her income tax and tax credit rates are 46 per cent.
This example shows that it is more beneficial for Mary’s heirs if she leaves a bequest of the securities to the Heart Institute and gives cash to her heirs than if she makes a charitable bequest of cash and gives the securities to her heirs.
Securities bequest (cash given to heirs):
Tax credit (46% x $100,000 market value) = $46,000
Minus: Tax on capital gain = $0
Net tax savings = $46,000Cash bequest (securities given to heirs):
Tax credit (46% x $100,000 cash donation) = $46,000
Minus: Tax on capital gain 46% (50% x $80,000) = $18,400
Net tax savings = $27,600The tax savings to Mary’s heirs ($46,000 – $27,600) = $18,400
If you wish to donate publicly traded securities to the University of Ottawa Heart Institute Foundation, please complete the attached document and deliver to your broker or other financial advisor. If you wish to donate mutual funds, certificated shares or other financial assets, please contact our Manager of Planned Giving Josée Quenneville (jquenneville@ottawaheart.ca) or by phone 613.761.4524 Thank you for your support of the Heart Institute.
Download Security Transfer Request (pdf)
Life Insurance Policy Transfer of Ownership
Download Life Insurance Policy Transfer of Ownership (pdf)
A gift of life insurance enables you to make a significant contribution to the Heart Institute at a small cost, while allowing you to receive tax benefits in the process.
- Have you wanted to make a large gift to the Heart Institute, but you couldn’t afford to?
- Do you have an existing policy on which premiums are owing, and you have achieved financial stability that the policy is no longer needed?
- Do you have a paid-up policy that your beneficiaries do not need any more?
If your answer is “yes” to any one of those questions, you may want to consider a life insurance contribution to the Heart Institute. Create a substantial legacy with a minimal outlay of cash!
Here are some examples of how you can make a life insurance contribution and receive tax benefits during your lifetime. Please note that these examples are for illustrative purposes only. Since each individual financial situation is unique, please consult with your insurance or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
Example: Purchase a New Policy Naming the Heart Institute as Owner and Beneficiary
Nancy is 45 years old and is a non-smoker. She currently makes annual contributions to the Heart Institute. She also wants to make a substantial gift, but cannot afford a large cash contribution. After talking with her insurance advisor, she decides to purchase a $100,000 permanent life insurance policy
and arrange for the University of Ottawa Heart Institute Foundation to become both the owner of the policy and the beneficiary of the proceeds. Nancy will pay the premiums directly to the insurance company.The benefits to Nancy are:
- She will receive charitable tax receipts for the premiums paid.
- The insurance proceeds will not form part of her estate and will be free of probate fees.
Example: Transfer an Existing Policy with Premiums Still Owing
Long-term supporters of the Heart Institute, Don and Sara want to leave a legacy to the Institute. Don has a whole life insurance policy with a face value of $100,000, on which they are making premium payments of $1,300 per year. The cash surrender value of the policy is $5,400.
After examining their assets, they realize that their other investments are sufficient to meet their family needs and would like to donate the life insurance policy. After consulting with their insurance advisor, they arrange to transfer the ownership of the policy to the University of Ottawa Heart Institute Foundation and to continue paying the annual premiums.
The benefits to Don and Sara are:
- They will receive a charitable tax receipt for the cash surrender value of $5,400.
- They will receive a charitable tax receipt each year for the annual premium of $1,300.
- The insurance proceeds will not form part of Don’s estate and will be free of probate fees.
Example: Transfer a Paid-up Policy to the Heart Institute
Bill has a paid-up policy with a face value of $100,000. He and his wife, Ruth, are at the point in their lives where they are financially secure and do not need the policy any more. They have wanted to give more to the Heart Institute than their annual contribution, so they have decided to donate the policy. The cash surrender value of the policy is $48,000 and the adjusted cost base is $10,000, resulting in a gain of $38,000*.
The benefits to Bill and Ruth are:
- They will receive a charitable tax receipt for the cash surrender value of $48,000, to offset the tax* charged on the gain.
- The insurance proceeds will not form part of Bill’s estate and will be free of probate fees.
* If the cash surrender value of the policy was equal to the adjusted cost base, there would be no gain; therefore, no tax would be payable.
Download Charitable Trust (pdf)
Donations through trusts are ideal for those donors who have substantial income-producing assets (cash, securities, or real estate), but who want to retain use of the assets, provide income for a surviving spouse or children, save on taxes, and avoid probate fees.
A trust consists of:
- The person who creates it by transferring assets to the trust
- The person or institution that manages it
- The person or persons who receive the income (interest or earnings) from it
- The persons or charity that receives the remaining capital amount once the trust terminates
The person who creates the trust can also be the same person who manages and receives income from the trust.
There are living trusts (established during one’s lifetime), and testamentary trusts (established at death through instructions in the will).
You can arrange a trust as a:
- Spousal Trust—provides an income to your spouse during your lifetime or once you pass away. Spousal trusts are more commonly established as testamentary trusts.
- Trust for Children or Other Family Members—arranged during your lifetime or upon death to provide an income to your children, grandchildren, siblings, or other family members.
Trusts as Charitable Gifts
A donation through any type of trust is called a Charitable Remainder Trust. You or a designated person or persons would retain use of the income from the trust. Once the trust terminates, all or a portion of the remaining capital amount in the trust is given to charity.
Benefits to the Donor
- You or a designated person or persons will receive a continuous flow of income until the trust terminates.
- You have the option of choosing more than one beneficiary, either for the income or the capital amount.
- You or your estate will benefit from tax credits.
- The assets in the trust are held outside your estate; therefore, the assets are not subject to probate fees.
- All trustee fees are paid from the income from the trust.
Charitable Tax Credit
The timing of the charitable tax receipt depends on whether or not the beneficiaries of the income from the trust are allowed to draw from the capital amount of the trust.
A charitable tax receipt will be issued when the trust is created if a legal agreement is reached with the charity that the income beneficiaries will not be allowed to encroach on the capital. (The amount of the charitable tax receipt is calculated using the appropriate discount factor to reflect the present value of the assets that the charity will receive from the trust.) Otherwise, the tax receipt will be issued once the charity receives the money, upon termination of the trust.
Please consult with your legal or tax advisor to ensure that you receive a full and accurate explanation of the benefits to you of your charitable gift.
