Guest article written by:
Greg Swanson
Retired Lawyer and past Community Foundation Board Chair
For much of his 40 year legal career Greg provided advice to clients on Wills and Estate matters.
One-Time or Forever Gift?
Many people have charities that they regularly support. The amounts may not be large. But from the charity’s point of view, “It’s not the size of the gift but the giving that counts.” Those donations might be larger if people knew the answers to life’s big questions: how long will I live?; will there be another Great Depression like the 1930s?; will inflation hit 12% or higher like in the 1980s?; will there be a worldwide financial meltdown like in 2008/09?; etc.
Without answers to these big questions, people tend to accumulate or at least preserve wealth so that they always have enough money to cover all of life’s needs and wants.
On death, all of these big questions are no longer important, and the focus changes from accumulating or preserving wealth to distributing that wealth through a Last Will and Testament.
The task of deciding how a person divides his or her estate on death is much simpler when all of the potential beneficiaries are “Independent”. By that, I mean they are adults, healthy and reasonably successful financially (able to pay their bills as they come due and not asking or needing help paying, for example, their credit card bills). In this situation, there is no legal or moral obligation requiring a person to scrimp and save so that he or she can leave a large inheritance to these Independent Beneficiaries. In this situation, all that a person needs to do is be sure that on death, there is enough money in the bank to pay the funeral bill.
It is when a person prepares her or his Last Will and Testament that there is an opportunity to do more for one’s favourite charity or community where you lived, worked and raised your family.
It is when a person prepares her or his Last Will and Testament that there is an opportunity to do more for one’s favourite charity or community where you lived, worked and raised your family. Rather than leaving 100% of the estate to one’s Independent Beneficiaries, a portion of the estate could be set aside for those good works close to your heart, with the balance of the estate going to the Independent Beneficiaries. In this case, while the Independent Beneficiaries will receive less, any amount will be a truly valued gift.
The portion of the estate going to the charities/communities will help support the good work that the charities/communities do. As a bonus, this portion is also tax-deductible, thus reducing the taxes payable at the time of death.
This possibility within a Last Will and Testament can provide for the charity/community in one of two ways. The gift can be given directly to the charity/community. In most cases, that gift will be spent by the charity/community in the year it is received and provide an immediate benefit to the charity/community. Alternatively, the gift could be held for the benefit of the charity/community by, for example, the South Saskatchewan Community Foundation. The Community Foundation would invest the gift, and the annual income earned from that investment would go to the charity/community and support its activities forever.
The question is then, does one provide a one-time gift to the charity/community or a forever gift?