Throughout drafting many Wills in our law practice, we have noticed the majority of people do not provide for charity. Here are four top reasons why the current generation does not provide more to charity:
1.Misunderstanding of the Benefits of charitable giving
There is substantial misunderstanding surrounding the taxation of estates and the benefits of charitable giving. Many people do not realize that RRIFs and RRSPs will go into their income at the time of death (or, if there is a surviving spouse and a rollover of funds, on the spouse’s death). Obviously, this can create a substantial tax liability with items such as RRSPs, RRIFs, and capital gains. Because most charitable bequests are tax-deductible, there is a substantial benefit to providing for charity within your estate plan.
2.The idea that charitable giving is less important than it used to be
This idea is perhaps an indirect result of increased government taxation, as well as the idea that charitable giving is not as important as it once was. However, with more sophisticated needs, such as the need for the opera, clean air, etc, we have realized that charity still has a place and stake in society. When it comes to charitable giving, you should have the power to decide where your money goes, not just the government.
3.Lack of Awareness Surrounding Giving Alternatives
There is a lack of awareness surrounding giving alternatives. Examples include providing a life estate to the donor (so he or she can continue to live in their home) with the real property passing to the charity upon the death of the donor. This has tax advantages while you are alive. Likewise, tax-deductible insurance companies have a wide range of products and a large breadth of knowledge of resources that can be provided.
4.Reluctance to Suggest Charitable Giving
Nowadays, there seems to be hesitancy from professional advisors, such as lawyers, accountants, and financial planners, when it comes to suggesting charitable giving. This could be because of the worry it might be seen as coercive or meddling. However, are advisors doing their job if they don’t at least bring the subject up? Not suggesting the direct taxable benefits of charitable giving might not be in your client’s best interests, either.
Ultimately, the bottom line is that whether you are making your retirement plans, drafting your will, or simply daydreaming about a better world, consider the benefits of a charitable legacy. What better way to face eternity than knowing you have helped to provide a charitable act, such as some much-needed green space, or help cure Cancer. Such a legacy could be the gift that keeps on giving.
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