Donate part of your RRSP or RRIF
A future gift of a registered retirement savings plan (RRSP) or income fund (RRIF) can be made without sacrificing your retirement lifestyle and is a great way to reduce taxation on any remaining assets in your funds.
In your estate all of the assets in your RRSP or RRIF will be taxed as income on your final tax return. This can result in the loss of nearly half of these assets to taxation. By giving a portion of the remaining assets in your RRSP or RRIF to DUC you can eliminate most or all of these taxes that your estate would have to pay.
A charitable annuity can be set up when you gift an amount of cash or other assets to DUC in exchange for a guaranteed income. Part of the gift is used to purchase the annuity to provide you with a steady income and part of the gift is donated to DUC. The donation provides a tax receipt. The income you receive, depending on your age, can be tax free.
With a bit of planning, a charitable annuity may provide a unique solution that enables a gift to DUC, yet also provides you with tax free income.
Charitable annuities may be an option to provide tax free income from your current investments.
Contact us for more information.
To fully determine how a planned gift can fit into your financial or estate plans, we suggest that you discuss these options with your legal, tax or financial advisors. DUC can provide a third-party contact to help you. This information is not intended as specific legal advice. Consult your attorney when considering any legal matters. The laws which govern wills and contracts vary and are subject to change.
Rose was a widow who had always appreciated wildlife, especially waterfowl. When her husband was still alive, they decided that whatever was left in their RRSPs, after they were both gone, would go to DUC. They named DUC as the beneficiary of the remaining assets of the last living spouse in their RRIF. When Rose passed away, there was approximately $250,000 left in assets gifted to DUC.
Let’s examine what Rose’s estate would have had to pay in taxes:
Amount left after taxes:
No gift to charity, but Rose’s estate does retain $137,500 from the RRIF. This is important to note. With a little planning, you can choose where your money will go.
As it was Rose’s wish to make a donation to DUC, this is what actually happened:
Gift to charity:
* Based on a 45% combined tax rate.