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Proactive Charitable Giving: A Balancing Act

Charity begins at home, so they say. This may be where it starts, but your estate plan is where your charity may end. Most of us will donate time or money to one cause or another during our lifetimes (who doesn’t love Girl Guide cookies?). When we die, however, our charity will die with us unless we proactively make plans to carry it forward. Failing to plan means by default choosing not to make charity a part of your estate plan. This may be what you intend, but as with all aspects of your estate plan, a careful consideration of available options and making a conscious decision is usually preferable to letting the decision be made for you. 

There are many reasons why you may not wish to include charitable giving in your estate plan on death.

  • Quite simply, you may not have a charitable intent and wish your family, dependents and other people who are important to you to solely benefit from your estate.
  • You may have a charitable intent but have loved ones who will need all of your estate to provide for them when you die, in particular if you have a spouse and/or children with special needs.
  • You may have a general charitable intent, but have no preference as to specific causes that should be supported, and prefer that your beneficiaries ultimately choose their own causes to give to after your death, instead of directing donations on your death.
  • You may prefer to give only during your lifetime in order to ensure oversight of your charitable giving for greater accountability than would be available after your death.

On the other hand, there are many reasons why you may choose to provide to charity after your death:

  • You may wish to leave the charities you wish to benefit regular donations similar to those you gave during your lifetime.
  • You may feel that the size of your estate will allow for your loved ones’ support as well as charitable donations.
  • You may be of the view that excessive amounts left to your children or grandchildren would not be beneficial for them and would detract from their self-reliance and self-realization.
  • Charitable giving during life and upon death is integral to many people’s spiritual or religious beliefs.
  • Tax benefits of making a charitable donation will be an added benefit to your estate, in addition to the personal and social benefits of charitable giving.

There are many ways to leave a charitable legacy, including:

  • a one-time lump-sum gift of cash or other property in your Will;
  • leaving funds in trust for distribution over time by your executor or by a charity for a directed purpose;
  • directing funds to be paid to a charity from a trust on the death of another beneficiary such as your spouse, setting up a donor advised fund with a financial institution to distribute funds to one or more charities (either specified or to be selected) during your lifetime and after your death;
  • gifting a life insurance policy, and setting up a charitable foundation.

The method that is right for you will depend on your personal priorities, circumstances and financial and tax situation, and may benefit from input from your professional advisors.

When deciding whether, how much, how and to which charities to leave funds or assets, there are a plethora of matters to consider and objectives and goals to balance. Careful consideration of all these matters so you make an informed decision will better ensure your objectives and wishes are fulfilled. As with many decisions, giving away money is easy – but giving it away well is hard!

— O’Sullivan Estate Lawyers

Please watch for our next blog post on the topic of removing beneficiaries from one’s estate plan.

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.