Helping a generous client support a charity close to her heart—an important part of personalized estate planning

Following the passing of her husband Gerry*, Esther came in to speak with GGFL partner, and her accountant, Jeffrey Miller to discuss several matters.

“First and foremost, I wanted to know how Esther was doing,” says Jeff. “She and Gerry have been clients of the firm since before I started working here over 30 years ago. They never had any children, so she was alone and unfamiliar with her own financial situation.”

Esther was very grateful to all of the people at the home where Gerry spent the final few months of his life. She wanted to thank them by making a sizable donation, but was not sure how to go about doing so. Jeff laid out some options that would make the most sense for Esther.

“Everyone’s situation is different, and depending on your specific circumstances, various opportunities exist,” says Jeff. “In all cases, I take the time to understand those unique circumstances so we can determine the best strategy together.”

Esther and Gerry had a significant investment portfolio and Esther wondered if she could simply sell some shares and donate the proceeds from the sale. Jeff explained that this was not a great option for her for two reasons.

“Esther relied on the annual income from the portfolio for her day-to-day living and I did not want to cut into that annual income,” explains Jeff. “The sale would also trigger a taxable capital gain which would have left her with less to donate.”

Jeff suggested the possibility of establishing a Charitable Remainder Trust (CRT) and transferring the portfolio into the trust.

“In this case, Esther would remain the income beneficiary during her lifetime, and the home would be the capital beneficiary when she passed away,” says Jeff. “She would receive a charitable receipt on transferring the portfolio into the CRT, and could use the donation as an annual tax saving measure.”

Like most people who aren’t in the financial world, Esther was unaware that this was even a possibility. She was very happy with that option, and Jeff suggested two more alternatives that he believed made a lot of sense because of Esther’s lack of heirs.

First, he recommended donating her fully paid-up life insurance policy, because with Gerry now gone, there was no beneficiary.

“Obviously, I would never have suggested this if they had children,” explains Jeff. “But for Esther, it would have been a colossal waste of money to have paid all the premiums to this point, only to have no named beneficiary when she passes away. This option made a lot sense.”

The final suggestion was similar to the life insurance option. Esther could make the home the sole beneficiary of her will. This would result in a charitable receipt for her terminal tax return and considerable tax savings for her estate.

“We don’t take a cookie-cutter approach to our client service,” says Jeff. “The recommendations I made to Esther are the not the same recommendations I would make to another client who had a completely different set of circumstances.”

GGFL staff, from the top all the way down, take the time to get to know each and every client on a personal level to ensure they are receiving the best advice for their circumstances. Esther’s story is not uncommon. Many clients come in and ask for our advice on how they can make a donation to their favourite organization the most tax-efficient way possible.

Contact our Non Profit team today if you are looking for advice on strategic donation planning.

*Please note that names have been changed to respect our clients’ privacy.

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