Have you ever thought of giving to charity in your will? Donations can be planned while living or through your will at death. The obvious benefit of giving while alive is that you can see the recipient organization benefit from your generosity. The benefit of gift planning at death is that you can arrange your affairs in such a way that you maximize your tax and estate benefits.

Once you decide that you would like to make a donation to a charity or charities, the next step is to decide in what form the gift will be given. Gifts can be made in many forms. We will deal with gifts of cash money, and shares of mutual funds in our example. The tax treatment of these gifts is different when donated to a charitable organization.

Although it is convenient, cash is a less favorable form of gift from the donor? point of view. It may be better from a tax point of view to donate shares rather than to sell shares and then donate cash. The reason for this stems from a change that came into effect on October 18, 2000, when the inclusion rate for capital gains dropped to 50%. When shares are donated, the inclusion rate is cut in half, to 25%. The end result is that it is more tax-efficient for an individual to donate shares rather than selling the shares and gifting the proceeds to the charity.

If you have designated a charitable gift in your will, make sure you consider the tax planning strategies of making your gift with shares rather than cash. There could be valuable tax saving opportunities available to your estate by giving your estate trustee the flexibility to donate shares rather than cash. The rules and regulations of charitable giving must be followed for these strategies to work. Make sure you seek advice from your qualified financial planner in making these decisions.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.