Estate Planning

Christmas is a time to give

Christmas is a time to give gifts to friends and family. In fact, a report by Mackenzie Financial says that 90% of all charitable donations are done in the month of November and December. While there are many reasons for making charitable donations, studies have shown that the top three reasons people give to charity are beliefs in the organization, commitment to social responsibility and paying less tax. Giving a worthwhile cause is good for the soul and it may also be financially rewarding.

Three great reasons to give to charity

1. As of the 2006 budget, Canadians can donate a publicly listed stock, bond or mutual fund and pay no capital gains. Prior to May 2, 2006, the tax rate on donated securities was half the normal capital gains rate. Let’s take a look at an example of how this is beneficial.

Let’s say I have a mutual fund portfolio worth $10,000 and I am planning to donate $1000 to a charity of my choice. If my mutual funds have appreciated in value it is better for me to donate shares of mutual funds worth $1000 and then use the $1000 cash (I was going to use to mane the donation) to rebuy the mutual fund. If I sell my mutual funds in the future, I would have to pay tax because of the gains. However, by donating shares, there is no tax. Rebuying the mutual funds with cash then lowers the amount of tax I will have to pay in the future.

2. Go to any fast food restaurant and it is easy to supersize your meal. When it comes to donating money to a charity you can also supersize your contribution through life insurance. Leaving large sums of money to a charity through an estate is becoming increasingly popular. These supersized donations often leave every lasting legacy providing years and decades of benefits to great charitable organizations. If you donate regularly to a charity anyway, you may want to look into the merits of using life insurance. It is amazing how a small monthly or yearly payment can create an exciting and meaningful legacy.

3. Mackenzie Financial has recently opened up its new Mackenzie Charitable Giving Fund. This fund makes charitable gifting easier than ever and allows people to give more to charities over a lifetime. Mackenzie has created a foundation that allows individuals to create their planned giving program in the foundation with their own name. This Year, we plan to open an account called the ‘Yih Family Charitable Giving Fund’. The minimum amount to open an account is $25,000. Future contributions must be at least $5000. Once you make the contribution to the foundation, you immediately get a tax receipt for the entire contribution. In the Mackenzie Charitable Giving Fund, you manage the investment of the account through any of seven mutual funds. At the beginning of every year, Mackenzie lets every account know how much is available for grants (usually 3 to 5% of the fund). The grant can then go to any registered Canadian Charity. The Foundation also has the added benefit that I can choose an individual to succeed as a successor. For example, I plan to choose to name our children to establish a multigenerational tradition of philanthropy. I think this will be one of the best tools to teach my children about the importance of giving.

I think the Mackenzie Charitable Giving Fund is an amazing tool to help shape and define your legacy. By setting up a charitable giving program, you can not only give back to your community through important charities but also create a lifetime of giving. For more information on how to set up a giving program through the Mackenzie Charitable Giving Fund, ask any financial advisor.

When I think of Charitable giving, I always think about the words of Sir Winston Churchill, “We make a living by what we get. We make a life by what we give.” There’s no better time to start than the present.

Leave a reply

Your email address will not be published. Required fields are marked*