What is Legacy Giving?
Legacy giving (sometimes called “planned giving”) simply means including a charitable gift in your overall estate plan. This can be a specific bequest in your Will, naming a charity as beneficiary of an insurance policy or RRSP/RRIF, or donating assets such as publicly-traded stocks, mutual funds, or even real estate during your lifetime or through your estate.
Key Tax Advantages Under Canadian Law
When structured properly, gifts of certain appreciated assets to registered charities (including most churches and ministries) can offer significant tax benefits:
- No capital gains tax on appreciated publicly-traded securities (stocks, bonds, mutual funds/ETFs) or certain real property donated directly to a charity – the gain is completely exempt (Income Tax Act s. 38(a.1) & s. 118.1).
- A charitable donation tax credit (or deduction if donated by your estate) based on the full fair-market value of the gift – often worth 40–54% of the gift’s value depending on your province and income level.
- The combined effect frequently allows you to give substantially more to charity than if you sold the asset, paid tax, and then donated the after-tax cash – all while leaving the same (or more) net inheritance for your family.
- Donations made through your Will are deemed to be made in the year of death, which can offset taxes on RRSP/RRIF withdrawals, capital gains, and other terminal-return income.
A Simple Example (General Illustration Only)
Imagine you own publicly-traded shares now worth $100,000 (original cost $20,000). If sold, approximately $40,000–$50,000 in capital gains tax might be payable (depending on your bracket). After tax, you would have roughly $50,000–$60,000 left to give.
By donating the shares directly to your church or charity instead:
- $0 capital gains tax
- Charity receives the full $100,000
- You (or your estate) receive a donation receipt for $100,000 → a tax credit worth roughly $40,000–$54,000 (covering, if set off on another tax event, up to the whole cost of the gift!)
Result: Your favourite ministry receives 40–70% more, and your family’s overall tax burden is reduced – often leaving them better off than if the shares were sold and the cash divided among heirs.
Important Notes
This information is for general educational purposes only and is not legal or tax advice. Every situation is unique. Tax rules are complex and change periodically. The benefits described apply only to certain types of property and registered charities.
Please consult a qualified wills & estates lawyer and a knowledgeable accountant or financial advisor before implementing any legacy giving strategy. I would be honoured to help you explore how this could fit into your estate plan.
Helpful Resources
- CanadaHelps – Donating Securities Guide: https://www.canadahelps.org/en/why-canadahelps/ways-to-give/benefits-of-donating-securities/
- Canada Revenue Agency – Gifts of Publicly Traded Securities: https://www.cra-arc.gc.ca/charitiesandgiving/giving/types-of-gifts/gifts-of-securities/
- My Estate Planning Services page: https://chadgrahamlaw.com/estate-planning/
If you’d like to talk about how legacy giving could work in your family’s situation, feel free to reach out – I’m always happy to have an initial no-obligation conversation.