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You Don’t Have to be a Millionaire to Make a Difference

You don’t have to be a millionaire to make a difference in your community! You can make a large charitable gift—and gain valuable tax savings for you and your estate. To help a charity that’s important in your life, consider these three ways of using a life insurance policy:

• If you own a life insurance policy you either (a) name the charity as beneficiary or (b) make your estate the beneficiary, and under your will create a bequest to the charity for an amount equivalent to the proceeds of the insurance policy. Upon your death, your estate receives a receipt showing your charitable donation as being equal to the total gift paid to the charity. This charitable contribution may help reduce the tax your estate must pay on capital gains, RRSPs and other income in that year.

• Buy a life insurance policy and assign a registered charity as owner and beneficiary. Once your chosen charity has agreed to this form of gift, you pay one month’s premium to have the policy issued. Then assign it to the charity, and the remaining amount of the year’s premium will be reflected in a donation receipt. After that first year, the charity can issue a charitable receipt to you for the premiums you pay each year.

• Give an existing life insurance policy to a registered charity. The charity can give you a receipt for a charitable donation equal to the policy’s cash surrender value. That charity may also issue a receipt to you for a charitable donation equal to the amount of premiums you pay after you transferred the policy. The person giving an existing policy may experience a tax on the gift, so it’s a good idea to check.

Ask me for all the specific details about how the charity of your choice can benefit from your planned giving.

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