ENHANCE THE JOYS OF GIVING Most people have experienced the relief in receiving needed help.
It may be an encouraging word from a caring school teacher or co worker.
It may be the support from a wise old grandparent.
It may be a research foundation or local community organization who helped you out.
Mothers are usually on the spot to help us early in life.
No matter when we receive help it's a comfort to know help is there if needed.
Most people have also known the rewards of helping others.
It makes us feel good to help someone and not ask anything in return.
Your giving might have been a show of emotional support, or it may have been financial.
We love to give and to receive.
Charitable organizations are faced with reduced government support and need to raise funds to continue their positive efforts.
The most common way to give is through fund raisers or direct solicitations.
PLANNING By planning your charitable giving over the long term you may be able to help even more plus provide stable income for the charity.
The Canadian government has opened some doors to allow you more power over where your support goes.
You can pay estate income taxes and they decide where they spend that money, or you can take advantage of some attractive tax rebates for charity donations.
Here are a few considerations: - A simple bequest in a will allows you to use what you need while alive.
- A life insurance policy owned by the charity can provide tax credits for you and multiply the estate gift.
- A prescribed annuity used to be used but new tax laws render it unattractive for tax planning.
EXAMPLE Using life insurance, a 60 year old man can leave $100,000 to a charity or qualifying non-profit organization upon death for only $1,200 a year after taxes.
(That will vary depending on your marginal tax rate) This takes into consideration the tax credit you get for paying the life insurance premiums.
There are conditions on how this should be set up.
ANOTHER EXAMPLE Since the 1998 Canadian budget, one can leave 100 % of income in year of death to charity.
This works well for estate planning.
For example if you expect to own a $200,000 RRSP at death.
It becomes income at your death; your estate will have to pay nearly $100,000 taxes to Canada Revenue Agency.
Your family gets the rest.
Let's assume you would prefer to leave all your 'before taxes'RRSP to your heirs.
This doesn't have to cost you money out of your pocket.
You coulduse $4,400 (as a 60 year old male) annually from a RRIF to buy a $200,000 life insurance policy.
This premium represents a little more than two per cent income from the $200,000 principal.
Leave the $200,000 RRSPs to your favourite charity.
Get a tax credit for the $200,000 and pay no income taxes on your RRSPs.
You leave the $200,000 tax-free life insurance benefit to your heirs.
Most people don't feel the same joy of giving when they give it to Canada Revenue Agency.
The donor experiences four times as much of the joy of giving in this example.
Instead of giving $100,000 to their heirs they double it to $200,000.
Instead of leaving nothing to their favourite charity, they leave an impressive donation of $200,000.
The children gain twice as much joy from the receiving.
They will be honoured and proud that their parents left a sizable legacy to a worthwhile charity.
The only one who gets left out is the Tax Man at Canada Revenue Agency.
Somehow most people aren't real broken up that they cut the Government out of their will.
The government is happy too since they don't have to fund charities.
They don't decide which charities survive and which don't.
Now you do the deciding through your financial planning.
They gave you the tax breaks so now you have that control.
Tax planning at its best.