The power of purposeful estate planning 

Guest blog by Jennifer Leach Sandford – Lawyer – Horne Coupar LLP 

Some clients approach their first meetings with estate planners with as much excitement as a visit with a tax auditor. However, for many estate planners, these meetings are among their favourite part of the job. I love to meet with clients, to learn about them and the lives they have lived. I am always curious to hear about their families, their pets and their vocations. I want to know how they intend to live the rest of their lives and how they envision their estate being distributed following their deaths. The information shared in these meetings serves to craft estate plans to address the clients’ unique intentions and needs. 

While the desire to provide for family and friends lies at the core of many clients’ estate plans, often clients hope to set aside at least a portion of their estate to make charitable gifts.  Such gifts serve as an effective income tax planning tool, eligible to offset up to 100% of the donor’s taxable income in the year of death. They also allow the client to make a lasting impact on the world following their death. Clients may direct their gifts towards a particular charity or cause that has meaning for them personally or they may wish simply support organizations in their community.  

For some clients, the challenge of deciding how much to give and to which organization can be overwhelming and may lead them to forego making a testamentary charitable gift altogether. Guidance from an engaged estate planner can help clients to weigh the benefits of different giving options: 

1. A specific gift to a specific registered charity is often the simplest option.  However, because the size of the gift is fixed in the will and because these gifts are paid out before the residue of the estate, a specific gift may be disproportionate to the ultimate size of the estate, providing a larger or smaller gift to the charity than the client intended.  
2. Another option is to provide a share of the residue of the estate to one or more charitable organizations. In this way, the charitable gift will grow or shrink in proportion to the other gifts in the will depending on the size of the estate at the death of the client. 
3. In some circumstances, a client may have sufficient resources to consider establishing a private foundation to which the client and their family can contribute during their lifetime and from their estate upon their death.  However, many clients are unaware of the large amount of work and cost involved in both setting up and administering a private foundation within the requirements of the Income Tax Act (Canada). Often a better choice for such clients is to set up a Donor Advised Fund with an established charitable foundation, such as the Victoria Foundation, which will permit the client to contribute funds that will be invested in perpetuity from which grants to charities chosen by the donor will be made. Such arrangements can also enable the client to select a successor fund advisor to choose the charities they wish to benefit after the client’s death or incapacity. 
4. Where clients have expressed a clear desire to make a charitable gift in their will but have not settled on a particular charity or cause, I have found that the Victoria Foundation can be an important planning partner in helping the client to articulate their charitable goals.   

Including charitable giving in estate planning discussions with clients allows the professional to connect with their client on a deeper level and can lead to a richer and more rewarding relationship with the client.