Why Do I Want to Leave a Legacy Gift?

By Joan Webster, Volunteer Covenant House

Since becoming a volunteer at Covenant House, I have witnessed firsthand the dedication and sincerity of the staff as they interact with the youth at the drop-in centre. The staff is totally COMMITTED to transforming the lives of these homeless kids.

The entire organization is so impressive and has a professional team of counsellors, case/outreach workers, development/fundraising personnel, administration staff and, of course, a wonderful volunteer coordinator! They all work tirelessly to ensure that Covenant House remains a sanctuary for hundreds of street kids.

And, of course, I am very grateful to Sister Nancy Brown, whose heartwarming letters of hope and transformation inspired me to become a volunteer.

By leaving a legacy gift in my will, I know, in a small way, that I can continue to support this wonderful organization and give these deserving young people a chance for a healthy and productive life!

 

The Clark Wilson LLP Wealth Preservation Group and Leave a Legacy Vancouver program of the Canadian Association of Gift Planners worked closely to help build awareness for Make a Will Week (MAWW), a Ministry of Justice campaign that encourages people to create and maintain an up-to-date will. An up-to-date will ensures that the people, charities and organizations you care about most receive the benefit of your estate. Visit our blogs all week for key posts related to MAWW and will preparation.

Recent Changes Impacting Charitable Giving

By the Clark Wilson LLP Wealth Preservation Group

The federal government recently announced amendments to the Income Tax Act (Canada) that will provide greater flexibility with respect to charitable gifts that are made in a will.

Currently, any charitable gifts that are made in an individual’s will are deemed to have been made by the individual immediately before he/she died. The donation tax credits that arise from the charitable gift can be used in the deceased’s final tax return or the immediately prior tax return, which can help offset the tax liability resulting from the deemed disposition that is triggered on death. However, there are a number of challenges with the current scheme. For one, it is not possible for any excess credits to be used by the estate to offset any income that may be earned by the estate after the individual’s death. In addition, it is not always clear when a charitable gift is considered to be made by will. For example, if the executor of the estate has the discretion to choose the total amount to be donated to a charity, then the gift may be considered to have been made by the estate, rather than the deceased, which would prevent the deceased from using the donation tax credit.

The recent amendments, which will apply to deaths that occur on or after January 1, 2016, address these issues and provide additional flexibility with respect to how donation tax credits can be used. Regardless of whether the gift is made by the individual in his/her will or by the estate, the new rules will deem the gift to be made by the estate at the time the property is actually transferred to the charity. As long as the charitable gift is transferred to the charity within 36 months of the individual’s death, the donation tax credit will generally be available to:

  • the estate in the taxation year in which the gift is made;
  • the estate in an earlier taxation year;
  • the estate in the five subsequent taxation years;
  • the deceased in the year of death; or
  • the deceased in the year prior to the year of death.

To ensure that your estate will benefit from this increased flexibility, any donation planning that is already in place should be reviewed and updated as required.

 

The Clark Wilson LLP Wealth Preservation Group and Leave a Legacy Vancouver program of the Canadian Association of Gift Planners worked closely to help build awareness for Make a Will Week (MAWW), a Ministry of Justice campaign that encourages people to create and maintain an up-to-date will. An up-to-date will ensures that the people, charities and organizations you care about most receive the benefit of your estate. Visit our blogs all week for key posts related to MAWW and will preparation.

Who Inherits When a Person Dies Without a Will?

By the Clark Wilson LLP Wealth Preservation Group

A person dying without a legally valid will is deemed to have died “intestate”. Dying intestate does not mean that the person’s estate will go to the government, but it does mean that the person will lose control of who will benefit from the estate and who will manage the estate.

The Wills, Estates and Succession Act (“WESA”) contains intestacy rules, which are essentially government-imposed rules on the distribution of a person’s assets when a person dies without leaving a legally valid will. If you have not made a will, then it is important that you know the intestacy rules, as they determine the recipients of your assets.

The distribution is straightforward if the person is survived by a spouse but there is no surviving descendent. In such a case, the estate all goes to the spouse. Similarly, if the person leaves no spouse but is survived by descendants, then the estate all goes to the descendants to be shared by the descendants per stirpes. The term “descendant” is defined in WESA to mean all lineal descendants (e.g. children, grandchildren, great grandchildren) through all generations.

The distribution is more complicated when the person is survived by both spouse and descendants. In those circumstances, the spouse will first receive the household furnishing and the spousal preferential share. Only after the aforementioned share of the surviving spouse, the spouse and the descendants will share the remainder of the estate in that the spouse will receive ½ of the remainder of the estate, and the descendants will share per stirpes the other ½ of the remainder of the estate. The amount of the spousal preferential share will depend on whether all of the surviving descendants are common descendants of both the deceased person and the surviving spouse. If they are, then the surviving spouse will receive $300,000.00 as the spousal preferential share. If there is at least one descendant that is not the descendant of the surviving spouse, then the surviving spouse will receive $150,000.00 as the spousal preferential share.

If the person died leaving no spouse or descendant, then the estate will go to the person’s other relatives based on a complicated “parentelic” distribution schedule. Under the parentelic distribution schedule, the line of the closest common ancestor is exhausted before other relatives will share in the estate. For instance, if there is no surviving spouse and descendant, the estate will go to the deceased’s surviving parent(s). If there are no surviving parents, then it will go to the descendants of the deceased’s parents (e.g. the deceased’s siblings and if no siblings, then the deceased’s nephews/nieces). If there are no surviving descendants of the deceased’s parents, then the estate will go to the surviving grandparents or surviving descendants of the deceased’s grandparents (e.g. the deceased’s aunts/uncles and if no aunts/uncles, then the deceased’s 1st cousins).

Under the intestacy rules, the degree of relationship is restricted to 4th degree of relationship. Anyone, except for lineal descendants of the deceased, beyond the 4th degree of relationship is deemed to have predeceased the deceased person. If a person died leaving no will and has no survivors within the 4th degree of relationship (except for lineal descendants), then the estate will go to the government.

As you can see, although dying intestate does not mean that your estate will go to the government automatically, it does mean that you will lose control of who gets what from your estate. In addition, it may cause delay in winding up your estate as someone will need to apply to Court to be appointed as the administrator of your estate. This also means additional legal expenses. If the distribution scheme as discussed in this article is not what you want, then it is time for you to consider estate planning, including having a will in place.

 

The Clark Wilson LLP Wealth Preservation Group and Leave a Legacy Vancouver program of the Canadian Association of Gift Planners worked closely to help build awareness for Make a Will Week (MAWW), a Ministry of Justice campaign that encourages people to create and maintain an up-to-date will. An up-to-date will ensures that the people, charities and organizations you care about most receive the benefit of your estate. Visit our blogs all week for key posts related to MAWW and will preparation.