Life Insurance Overview
Charitable giving can be a rewarding experience by allowing you to both give and receive. To enjoy the benefits of charitable giving, you can utilize a variety of strategies.
Life insurance is the one asset almost everyone has. For the young parent with limited dollars, it is a way to protect the family against economic loss in the event of a parent's premature death. For the business owner, it may provide dollars to buy out a deceased partner's interest or compensate for the loss of a key manager. For older individuals, it provides the liquidity needed to settle an estate and pay taxes.
Life Insurance is also an excellent vehicle to use in some gifting strategies in order to "reimburse" beneficiaries for gifts given to a charity. Your gift to the Ottawa Regional Cancer Foundation will be wisely administered through our investment program, which will result in a stable source of income to the Cancer Foundation for years to come.
An Appropriate Strategy for You?
If this strategy sounds interesting to you, there are a variety of considerations. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance. Before implementing this strategy, it would be prudent to have the policy approved. In addition, you should seek professional advice from an attorney before establishing such a trust. In many cases, the wealth replacement trust is an appropriate way to preserve family wealth.
For additional information, please contact:
Executive Vice-President, Philanthropy
johno @ ottawacancer.ca
613.247.3527 ext. 227
Gifts of Life Insurance:
Gifts of life insurance can be made in more than one way:
Make the Ottawa Regional Cancer Foundation the beneficiary of your existing policy.
If you simply designate the beneficiary of your existing life insurance policy to be the Ottawa Regional Cancer Foundation, your estate will receive a charitable tax receipt for the value of the death benefit.
This receipt can be used to offset tax payable on the final tax return.
Note: If the donation receipt exceeds the net income in the final tax return, it can be carried back to the previous year).
Make the Ottawa Regional Cancer Foundation the beneficiary and owner of a paid up policy.
You can designate the Ottawa Regional Cancer Foundation as the beneficiary and owner of the paid up life insurance policy. In this way, you will receive an immediate donation receipt for the cash surrender value to offset current income tax.
If the donation exceeds 75% of your net income for the year, you can carry the excess tax credit forward up to five years.
Name the Ottawa Regional Cancer Foundation as the owner & beneficiary on a policy with premiums still owing.
You will receive an immediate tax receipt for the cash surrender value and tax receipts for any ongoing premiums you make.
If you choose to purchase a policy with one lump sum payment, you will receive a one-time tax receipt for the entire amount.
As above, if the donation exceeds 75% of your net income for the year, you can carry the excess tax credit forward up to five years.
Gifts of an RRSP or RRIF
Many people ultimately face a substantial loss of their retirement savings through taxation, when the entire RRSP or RRIF is taken into income and taxed in the year of the death of the plan holder. Depending on applicable taxes, close to half of these funds may be lost due to taxation. By gifting the funds you would otherwise pay in tax, the charitable tax receipt will, in many cases, offset the tax owing.
There are two ways to gift all or part of your RRSP’s and RRIF’s. You can simply ask your financial institution for a change of beneficiary form and designate the Ottawa Regional Cancer Foundation as your new beneficiary and add a codicil to your Will that provides a charitable gift equal in value to the RRSP or RRIF proceeds.
Gift of Securities:
Investors can now donate an security listed on a Canadian or major international stock exchange and pay no tax. In fact, donors can actually make money on their gifts if the charitable tax credit exceeds the cost of their original investment.
Mrs. Jones paid $4,000 for shares in ABC Corporation and now they are worth $10,000, so she has a capital gain of $6,000.
By donating the shares to the Ottawa Regional Cancer Foundation she pays no capital gains tax.
Mrs. Jones can then apply her charitable tax receipt for $10,000 against her other income. At a marginal tax rate of 44% Mrs. Jones saves $4,400 in tax.
Mrs. Jones donated securities that cost her $4,400 and she saved $4,400 in tax – and in addition to that she did not have to pay capital gains tax on the sale of the shares.
The Result: She came out $400 ahead after supporting the Ottawa Regional Cancer Foundation with a gift of $10,000 – and has peace of mind knowing that her donation is going to make in impact on the lives of thousands of cancer patients in our community.
Other Ways to Give
There are many other ways that your gift to the Ottawa Regional Cancer Foundation can be structured to meet your philanthropic needs while maximizing tax savings and other benefits.
Gifts can be either immediate or deferred gifts or a combination of both.
To find the option that works best for your portfolio please contact the Ottawa Regional Cancer Foundation:
Director of Annual and Planned Giving
613.247.3527 ext. 233