Even if you're still just thinking about it that's fantastic! But if you could guarantee that your
charities receive a much larger gift using this same money – and remove
potential headaches for your executors – would you consider doing that instead?
Giving through your Will – a public document that all can
see – can present challenges that you might not have thought of.
For example, is there any chance that any of your beneficiaries
may resent your charitable gifts because they feel that they deserve a bigger
inheritance – especially if they have acted as your caregiver? It’s quite
common that scenarios like this result in beneficiaries contesting
philanthropic gifts made through a Will.
Such challenges can result in significant delays in settling
your estate. This adds significant legal costs that reduce the size of the
estate for all of your beneficiaries, including your charities. This can decrease
the size of charitable tax receipts that you may be counting on to reduce estate
taxes in order to leave more to all your beneficiaries.
Also, the anger and disagreements that often surround
contested Wills often permanently fractures families.
Here are three simple and cost-free ways that ensure your
charitable wishes remain intact.
1. Give to your favourite charities while you are
alive. Time-honoured estate planning
strategies often involve reducing the potential size of your estate. If you can
afford to give now, your estate will be smaller so will its taxes, fees and many
potential headaches for your executor.
2. Or if you are less than 80 years old, it’s often wise to use
money you’ve set aside for your charities to buy a life insurance policy,
naming your charities as its beneficiaries.
Life insurance allows anyone, even people of modest means,
to give more. In many cases, if you have
normal health issues such as high blood pressure or cholesterol and they are effectively
managed with medication, you are likely eligible to buy life insurance. Finding out if you are insurable is actually a
simple process.
When you choose a life insurance policy that grows in value
over time you’ll get four important benefits without spending any more money:
i) You can withdraw the growing
cash value inside your policy anytime, just in case you
need money sometime down the road.
ii) The size of your charitable
gifts increases over time so your charities can have a bigger impact on the
causes close to your heart.
iii) Tax receipts to your estate also
increase in value, helping to offset your potential estate income and capital
gains taxes.
iv) Growth in the value of life insurance
policies is tax-free so you’ll give more, without spending more.
Because life insurance policies are private, and
usually can’t be contested*, you won’t lose control over your charitable
intentions. Even better, because your death benefit will go to your charitable beneficiaries
outside of your Will, your charities will get your gifts much faster and with
very little effort on the part of your executor.
Now isn’t that something worth thinking about?
Note: To learn more about whether life insurance estate strategies
are the right fit for your circumstances, you must consult with a licensed insurance
professional. When using insurance strategies to multiply your generosity to
charities, it’s ideal to consult an advisor who is well versed in maximizing the
power of your charitable giving, while also reducing potential taxes and other challenges
that your estate might incur.
Jack Bergmans, CFP
Best-selling author of
Ripple Effect: Growing your business through insurance and philanthropy &
Multiplying Generosity: Creatively using insurance to increase legacy gifts
Ripple Effect: Growing your business through insurance and philanthropy &
Multiplying Generosity: Creatively using insurance to increase legacy gifts
* Some exceptions
