Taxes are on the minds of many as we approach the end of the year. If you ask an accountant, they are likely to suggest that a little advance planning could help minimize the tax collector鈥檚 cut of your estate after your final year of life.
According to Jackie Leung, chartered professional accountant, owner of SHL Leung & Co. Inc. and a volunteer on Legacy Giving Advisory Committee, ways to minimize tax liability include having a will in place and investment planning, including .
Leung said she advises her clients to have a will, especially if they are over the age of 50.
鈥淲ithout a will, the government will have control of your estate,鈥 she said.
After a will is in place, Leung works with her clients to forecast their tax situation, and recommend legacy giving and investment planning options.
鈥淲hen you pass away, if you have no spouse, almost all you own gets calculated as income or investment income for that year, 鈥 Leung said. 鈥淚t can be a lot of money in comparison to what you were living on leading up to your final year.鈥
One way to offset taxes on your income is through legacy giving, which could entail leaving a bequest 鈥 the act of giving property by will 鈥 or by naming a charity as the beneficiary of one of your registered accounts.
For example, you may designate a charity as the beneficiary of your RRSP or RRIF account.
鈥淵ou can leave a gift in your will by designating a percentage of your estate to a charity,鈥 Leung said, adding that she helps clients maximize their donation against tax liability.
鈥淔or someone who is interested in legacy giving, I forecast their tax situation and then recommend a certain percentage.
鈥淏y making a legacy gift, you鈥檙e helping the community and at the same time you get donation credits,鈥 Leung continued. 鈥淚f you鈥檝e got donation credits, you鈥檙e actually better off.鈥
Donation by will or by assigning the charity as the beneficiary can apply to the last two years of your returns. The donation value is limited to 100 per cent of the net income for the deceased, instead of 75 per cent for a regular tax payer. In this way, a legacy donation is able to reduce the tax bill to $0 as well as generate a big refund if you paid a lot of tax the year before you passed away.
Minimizing tax on your estate means leaving more for your family and community, and less to the Canada Revenue Agency.
鈥淭hrough legacy giving, you鈥檙e transferring the money you would be paying to the government, to the community,鈥 Leung said.
鈥淚t鈥檚 always good to give back to the community, especially if you鈥檝e enjoyed a good level of service from an organization like 91原创 Memorial Hospital Foundation.鈥
If you have questions, Leung suggested contacting an accountant, a financial advisor and/or lawyer who can help you navigate the legacy giving process.
Visit 91原创 Memorial Hospital Foundation online for access to legacy giving resources, such as sample will clauses, as well as contact information for members of 91原创 Memorial Hospital Foundation鈥檚 who can discuss aspects of your personal estate plan, including charitable giving options.