What if you donate to charity in your will?
Bequeathing assets to charity has a double benefit: you support a cause close to your heart and can reduce estate taxes.
A particularly effective strategy is to donate stocks or mutual fund shares “in-kind” (i.e. without having to sell them to bequeath funds).
“If you have appreciated investments, it can be useful to donate them in kind to avoid the estate having to pay tax on the gain realized,” says Griffith. This saves you from counting the Canada Revenue Agency (CRA) among your heirs.”
If you make these types of in-kind donations, the charity will receive the total value of the property bequeathed when you make the donation and issue a tax receipt for that amount.
However, if you plan to give away an investment with lost value, Griffith recommends liquidating it and donating the amount received. In this way, the estate will be able to take advantage of the losses to offset gains made elsewhere.
This begs the question: how do you ensure that your charitable donations will be made in the most tax-efficient manner after your death? The easiest way will be to include instructions in your will for your executor (and set aside the necessary funds), so they know what to do and can pay for financial and tax advice.
