Every May, Canadians are encouraged to reflect on their impact and consider how their values and generosity can live on after they’re gone. Leaving a Legacy Month—a national awareness initiative spearheaded by the Canadian Association of Gift Planners (CAGP) promotes the importance of including charitable bequests in estate planning. The campaign aims to empower individuals to support the causes they care about and ensure their legacy has a lasting effect.
For Albertans, this is a valuable time to assess what you wish to leave behind and how best to do it transparently, tax-efficiently, and in a manageable way for your loved ones and executors. Whether you’re considering a gift to a local animal shelter, university, health foundation, or international aid organization, proper legal planning is essential to ensure your wishes are honoured.
This blog will explore Leaving a Legacy Month, how charitable giving can be incorporated into a will or estate plan, and how to avoid the common pitfalls that can lead to delays or legal challenges for your executor.
What Is Leaving a Legacy Month?
Leaving a Legacy Month is part of a larger national campaign encouraging Canadians to consider leaving a gift to charity in their will. The campaign is not about large sums of money, though large donations are welcome, but about the idea that every Canadian, regardless of wealth, can leave something meaningful behind.
According to CAGP, more than 3 million Canadians have already included charitable gifts in their wills. These legacy gifts can fund scholarships, advance medical research, build infrastructure, or provide essential services for the vulnerable. Yet, many others are unaware of how easy and impactful it can be to make a charitable bequest part of their estate plan.
Why Leave a Charitable Gift in Your Estate?
There are many reasons people choose to make charitable gifts in their wills:
- Personal Values: Legacy giving allows your final act to reflect your values and passions.
- Tax Planning: Properly structured gifts can reduce the taxable value of your estate and generate charitable tax credits.
- Community Impact: These gifts fund the vital work of non-profits in health care, education, social services, arts, and more.
- Intergenerational Legacy: Leaving a legacy gift can inspire your family and future generations to give back.
Forms of Charitable Giving in an Estate Plan
There are several common ways to incorporate charitable giving into your estate plan:
1. Specific Bequest in a Will
This is the most straightforward method: a clause in your will stating that a specific dollar amount, percentage of the estate, or asset (such as real estate, stocks, or collectibles) is to be given to a particular charity. For example:
“I direct my Executor to distribute $25,000 to the Alberta Cancer Foundation.”
Ensure the charity’s legal name is used to avoid confusion or misdirection.
2. Residual Bequest
This is a gift of what remains in the estate after all debts, taxes, and other specific bequests have been fulfilled. For example:
“I give 10% of the residue of my estate to the Calgary Humane Society.”
Residual gifts are flexible, as they adjust with the size of the estate.
3. Contingent Bequest
These gifts come into effect only if certain conditions are met, such as if a named beneficiary predeceases the testator.
“If my spouse does not survive me, I leave $50,000 to the University of Alberta.”
4. Naming a Charity as Beneficiary
Another option is to name a charity as a beneficiary of your RRSP, RRIF, TFSA, or life insurance policy. These gifts pass outside the will and are not subject to probate.
Tax Benefits of Charitable Bequests in Canada
Canada has one of the world’s most generous tax regimes for charitable giving. When you leave a charitable gift through your estate, your estate may be able to claim donation tax credits that can offset up to 100% of your final tax return and the return from the year prior.
This can result in significant tax savings, increasing the value of the remaining estate for other beneficiaries while still supporting a cause that matters to you.
A qualified estate planning lawyer can work with your accountant or financial planner to ensure your gift is structured to maximize these tax advantages.
Tips for Leaving a Legacy Without Complications for Executors
Including a charitable gift in your will is admirable, but it’s important to do so thoughtfully. Poorly drafted clauses or a lack of planning can cause delays, create disputes, or burden your executor. Here are some practical tips to avoid complications:
1. Work With an Experienced Estate Lawyer
This is the most important step. DIY wills or generic templates can easily lead to ambiguous language. An estate lawyer will ensure the terms of your gift are clear, legally valid, and enforceable under Alberta law.
They can also ensure your will includes the appropriate powers for your executor to make the charitable gift, especially if real estate, business interests, or investment accounts are involved.
2. Identify the Charity Properly
Use the charity’s full legal name and include its CRA registration number. Many organizations have similar names, and failure to correctly identify the intended recipient can result in delays or misdirected gifts.
Your lawyer can also include a clause allowing your executor to redirect the gift to a similar organization if the charity no longer exists at your death (a “cy-près” clause).
3. Ensure Liquidity in the Estate
If your charitable gift is substantial, ensure your estate will have enough cash to pay it without having to sell essential assets or delay distribution to other beneficiaries. A financial advisor or estate planner can help you assess liquidity needs.
Consider whether designating a life insurance policy or a specific investment account to fund the charitable gift might make more sense.
4. Discuss Your Intentions With Your Executor
Let your executor know about your charitable gifts and the values behind them. A well-informed executor is better prepared to carry out your wishes and deal with any questions or challenges from family members.
You may also wish to write a letter of wishes to accompany your will, explaining why you chose to support specific causes. While not legally binding, it can help avoid conflict and provide clarity.
5. Coordinate With Your Other Beneficiaries
If your loved ones are unaware of your charitable gifts, they may be surprised or upset. Clear communication can help set expectations and avoid challenges based on undue influence or lack of capacity.
In some cases, involving your beneficiaries in your philanthropic vision may make sense. For example, set up a family donor-advised fund or allow them to choose a recipient within a range of causes you care about.
6. Keep Your Will and Estate Plan Updated
Charitable organizations can change names, merge, or shut down. Your financial circumstances may also evolve. Make it a habit to review your will every few years or after significant life events to ensure your charitable intentions are still accurately reflected.
7. Avoid Relying Solely on a Memorandum or Verbal Agreement
While a memorandum of wishes or a verbal expression of your charitable intent may guide your executor, it is not legally binding. If you want to guarantee that a gift is made, it must be spelled out in your will or estate documents.
Including a Charity in Your Legacy: A Lasting Act of Generosity
Leaving a legacy gift is a profound and enduring way to support the organizations and causes that reflect your life’s values. Whether you are passionate about medical research, education, environmental conservation, or social justice, there are countless charities in Alberta and across Canada doing meaningful work that can benefit from your support.
Thoughtful planning helps ensure your wishes are honoured and reduces the burden on your executor and loved ones. Working with professionals—including estate lawyers, accountants, and financial advisors—can ensure your gift is structured most effectively, efficiently, and impactfully.
Calgary Estate Planning Lawyers: Make May the Month You Take Action
Leaving a Legacy Month is not just about celebrating philanthropy; it’s about encouraging action. If you’ve thought about giving back but haven’t taken the legal steps to include a charitable gift in your will, now is the time.
At DBH Law in Calgary, we work with individuals and families across Alberta to build estate plans that reflect their values and provide clarity and confidence for their executors and beneficiaries. If you’d like to learn more about including a legacy gift in your estate plan, contact our team today by visiting us online or calling 403.252.9937. Your legacy can live on. Let us help you shape it.