Do you give with a hot or cold hand?
OK, so you’ve determined that you now have more money than you need to support yourself for the rest of your life, even though you need long-term care and everything goes wrong with your life. investments.
Are you donating money now? To family, charities, or both? What are the implications of each?
What about your estate? Are you planning to leave any to charities? Do you know by how much this can reduce the taxes your estate pays and if it will affect the amounts left to your family?
These are some of the many issues that we are discussing with clients in this situation, and these questions are particularly timely at this time.
Internally, many people with large investment portfolios are in the best financial position they have ever seen.
Externally, the Canadian Association of Planned Giving Professionals (CPGA) and the CPGA Foundation have launched a national public education effort called Will Power (www.willpower.ca) to raise awareness among Canadians to the enormous benefits offered to the nonprofit community. if more people made even a small donation to charities in their wills.
They predict the initiative could raise up to $ 40 billion over the next 10 years to support needed social causes.
Will Power has a small, but deep goal, to increase the percentage of donations given through bequests from the current five percent of people to 8.5 percent, starting with as little as one percent of a succession.
From my perspective as a financial planner, it makes a lot of sense to most people if the gifts are carefully planned to maximize the tax benefit. Community benefit goes without saying.
Naming charities in your will does not prevent you from making current gifts to your family or to a charity while you are alive. This is what we can call the difference between giving with a warm hand and a cold hand. Donating now gives you the satisfaction of seeing the positive difference you have made, while you can enjoy and be appreciated for your generosity.
Sometimes family support is out of necessity when adult children lose their jobs, have a health crisis or divorce. I have seen all of this and more in my career.
Other times, it’s to help family members get on with it or get something they couldn’t otherwise afford, be it a house, travel, or home repairs.
A recent Globe and Mail An article on this topic cited Dr Moira Somers, a Winnipeg psychologist who specializes in behavioral finance and financial advisor support, as mentioning that she had received help from her mother years ago with a fencing. “Every time I look at this fence, it’s gratitude to my mom.”
In my case, my mom loaned me $ 400 to buy my first really good bass guitar when I was 14, a 1966 Fender Telecaster. The difference was that I had to work 40 hours a week for 10 weeks this summer. there to reimburse her.
Since I was only 14, I couldn’t even demand minimum wage. It taught me a lot about the cost of things in terms of sweat and toil, a lasting lesson and the real gift.
Therefore, my philosophy is that you have to differentiate between gifts to established adult children who are motivated and hard-working, who will continue to work so hard after a gift, while being careful with gifts to adult children who have shown of little initiative or systematically over-spent and contracted debts.
Next week, we’ll go over the tax and other ramifications of living giving to family and charity, as well as the considerations to take into account when building a charitable bequest in your will.
See you next week for the second part.
Dollars et Sens is intended as an introduction to this subject and should in no way be interpreted as a replacement for personalized professional advice.
David Christianson, BA, CFP, RFP, TEP, CIM is the recipient of the FP Canada ™ Fellow (FCFP) and has been repeatedly named one of the 50 best financial advisers in Canada. He is a portfolio manager and senior vice-president at Christianson Wealth Advisors at National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.
Personal finance columnist
David has been a financial planner and life advisor since 1982, specializing in helping clients identify and achieve their most important goals, and then helping them manage all of their financial affairs, including investments.
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