Concordia Journal Home > Archives > September 13, 2007 issue >

Leave behind a legacy 

By Barbara Black

In the year of your death, the government is going to take a gigantic bite out of your life savings, but you can do an end run around the tax man by including the university in your will.

Supposing at the time of your death your income is $50,000 and there is $250,000 in your RRSP. Because the residue of your RRSP is taxable in the year of your death, that’s $300,000 in total. Subtract roughly $20,000 in exemptions and you have $280,000 in taxable income.

Congratulations. You have posthumously jumped into the 48-per-cent tax bracket, and your loved ones will have to pay a whopping $135,000 to the government before seeing any of their inheritance.

If you gave $135,000 of your RRSP to Concordia, you would reduce your taxable income to $145,000 and pay the government only $50,000. An endowment established in your name would generate scholarships in perpetuity, and many students would remember you with gratitude.

Here’s the key: If you name the university as a beneficiary in your will, the value of the asset transferred becomes a tax credit applicable to tax payable in the year of death as well as the preceding year.

Statistically, only five to six per cent of Canadians provide bequests to charity, although 33 to 50 per cent could afford to. Since the average bequest is around $30,000, millions of dollars are lost to hospitals, arts foundations and universities. The pity is that many people would like to provide a bequest, but they just don’t know how.

Director of Planned Giving Alex Carpini, who spent nearly 30 years in intergenerational financial planning before coming to Concordia, relishes the task of helping people understand the implications of planning their wills. He and the Planned Giving Committee can demystify the process by explaining how to minimize your tax payable and maximize your opportunity to give.

The committee is a team of expert alumni — lawyers, notaries and financial planners — ready to offer expertise to anyone who intends to leave a gift to the university.

“We know how important it is for benefactors to be assured that their gift will be used for their intended purposes, so we make sure the text of the bequest is accurate,” Carpini told the Globe and Mail recently. “With the support of alumni, we are able to get the best available advice at a fraction of the usual cost. We have 150,000 alumni. It’s a very big pool to draw on.”

Your gift can even reduce your taxes right away, while you’re alive. Through an annuity or a charitable remainder trust, you can transfer specific assets to Concordia but continue to receive the income on them throughout your life. You can transfer an investment to a charity, or name the university as the beneficiary of your insurance policy or your retirement plan. These direct designations will not be subject to probate tax.

When you draft your will, the gift can be expressed as a dollar amount or as a percentage of the estate value. If your will has already been drawn up, you can simply add a codicil, or addendum, stating your intention to give to the university.

Carpini said the codicil should be written in your own hand, and not be witnessed. “Don’t put it in a safety deposit box; just put it somewhere safe but accessible to your family.”

If you intend to leave a gift to Concordia, you should let the university know your intentions. You will become a member of the Heritage Society, which has been established to recognize donors and their generosity. You can reach Alex Carpini and his staff at extension 8945.