Diocese of Saskatoon

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FAQ

What about using some of the money in my RRSP or other retirement plan to make a charitable bequest? Is this a good idea?

Yes. The combined impact of estate and income taxes can, in some cases, take up more than 70% of the assets in a retirement plan. However, if you fund a bequest to a charity from retirement plan assets, the full amount of the retirement plan assets can pass to the charity without estate or income taxes.

Is life insurance a good way to make a gift?

Yes. You can give a life insurance policy to charity and take an income tax deduction for this gift as well as a deduction for any additional gifts to the charity to allow it to pay any ongoing premiums. Alternatively, you can retain ownership of the policy and just name the charity as beneficiary, though no income tax deduction is available for this approach. In both cases, there are no estate taxes on the life insurance proceeds.

Is stock the only type of appreciated asset I can use to make a gift to the charity?

No. Many charities gladly accept gifts of land, manufacturing/office buildings, apartment buildings, limited partnership interests, cars, art, boats, planes, etc. It is always best to consult with the charity early in the planning process if you wish to make a contribution of this type, and to determine if the property's use is related to the mission of the charitable organization so that you may qualify for maximum income tax advantages.

Does the income from one of these gifts have to go to me or can someone else, like my mother, receive the income?

Income gifts can be very useful to provide support for a person dependent on you, such as a parent or student. You receive the charitable deduction for making the gift, but the income recipient- for instance, your mother- declares the income for tax purposes. In all likelihood she is in a lower tax bracket, so there is less tax owed than if you received the income and used it to provide for her support.

If I use stock, will either a charitable gift annuity or a charitable remainder trust be able to increase my income?

Yes. You may own stock that has greatly appreciated in value, but pays only a small dividend. By gifting that stock to a charity or charitable trust, you defer paying the capital gains tax, you realize a tax deduction equal to a portion of the value of the stock, and you could receive a much greater income than you realized from the dividends.

Then, what is a charitable remainder trust?

A charitable remainder trust- much like a living trust- holds assets on your behalf. However, a charitable remainder trust can only be used to hold gifts that ultimately will benefit a charity. You and the trustee agree at the time the trust is established on a type of payment to you: either an annuity payment representing a fixed dollar amount or a payment representing a fixed percentage of the trust assets, which are revalued annually. At your death, the assets remaining in the trust are transferred to the charities you designated when you established the trust.

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