Introduction to Charitable Gift Planning

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Charitable gift planning is catered to individuals who would like to gift to charities and non-profit organizations in their lifetime and/or after passing. Once an individual identifies what charitable cause or organization they wish to support, they can incorporate charitable gifts in their estate plan through various charitable vehicles, such as:

• Testamentary Bequests;
• Charitable Trusts;
• Donor-Advised Funds; or
• Gift Annuities.

In this article, we overview some key points that donors should consider when planning to make charitable gifts in their estate plans.

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WHAT IS A LEGALLY VALID GIFT?

According to law in Ontario, there are three basic requirements for a gift to be legally valid:

1. Intention: The donor must intend to make a gift to the recipient.
2. Acceptance: The recipient must accept the gift (generally assumed unless rebutted).
3. Delivery: The gift is given without expectation of exchange or return.

The donor must also have proper title and ownership of the property they intend to gift, and both the donor and recipient must have the legal capacity to make and receive the gift. Capacity to make a gift is usually defined as the donor’s ability to understand the nature and effect of making the gift.

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WHAT ARE THE BENEFITS OF MAKING CHARITABLE GIFTS?

Other than the personal fulfillment of supporting causes that are meaningful to you, there may be some tax benefits to making charitable gifts:

• These gifts may qualify for charitable tax credits, potentially offsetting taxable value of your estate upon your passing.
• These gifts may potentially eliminate capital gains tax if the donated assets are those such as stocks or real estate.

It is important to consult an estate planning lawyer and tax professional to ensure your gifts are eligible to receive these benefits.

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KEY CONSIDERATIONS FOR POTENTIAL GIFTERS

• Prior to making a gift, you should confirm with the recipient charity that they will accept the gift. The recipient must be a registered charity to ensure that your gift is received properly and is eligible for charitable tax credits.
• Certain unique gifts, such as cultural and ecological property, may need to be certified in advance of making the gift.
• The donor should be familiar with the charity’s purpose and objectives. If the donor wants to qualify their gift (i.e., requiring that it be used for a specific purpose), the donor should document their intentions and discuss them with the charity ensuring that the donor’s objectives are achievable.
• The donor should consider charitable organizations that have a solid succession plan and strong governance, with the maturity to handle large donations.
• The donor should always document their charitable objectives and intentions in case there are scenarios where the charitable bequest cannot be fulfilled as intended.
  • For example, if the charity no longer exists after the donor’s passing, well-documented intentions can enable the Court to apply the legal doctrine of cy-près, whereby a testator’s intentions are carried out through alternative but similar means, such as gifting to a different charity with similar objectives aligning with the testator’s documented intentions.

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Jasmine Sweatman is a renowned specialist in the world of charity bequest management. As Founder of Sweatman Charities Consultants, she has decades of experience guiding gift donors and helping charities fulfill their legal responsibilities in receiving their bequest gifts.

Learn more about her unique expertise in her widely acclaimed book, Bequest Management for Charities in Canada here: https://shorturl.at/HRRDd

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DISCLAIMER: This blog post should not be interpreted as legal advice for your specific situation, concerns, or challenges. All gifting plans are unique and should be reviewed by legal, financial, and health professionals, and tax accountants. Please be advised that the information on this website relates to laws specific to Ontario or Canadian federal law. Legal advice, procedure, and legislature may vary in different jurisdictions.