Methods of making Charitable
donations
John Merlo BA,CFP
November 12th, 2014
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset
Mgt. Inc., Member MFDA
Agenda
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Assigning Ownership of Life insurance
Term Policy assignment
Whole life/UL assignment
Charitable Bequest
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Assigning ownership
• Make a significant contribution at modest
cost
• Most cases tax credits are issued
• Allows for a large contribution even if lack
the existing capital
Term life Assignment
• Charity must assume ownership of policy
• No cash value so no tax receipt issued
• Tax receipt issued for premiums paid by
taxpayer
• Charity can establish new policy on
taxpayer
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Term life example
• John holds a life policy with a death
benefits of $300,000. The premiums on
the policy are $120/month. John decides
to assign policy to the LeRoi Foundation
and continues to pay premiums. Charity
now issues a receipt each year of $1440,
calculated as (#120x12 months)
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Whole Life/UL Policies
• Tax receipt for cash value at time of
assignment
• Tax receipt for future premiums
• Older policies may have tax issue
depending on ACB but possibly offset by
tax receipt.
Mutual Funds and securities related to financial planning serivces are offered through Qtrade Asset Management
Inc., member MFDA
Example
• Danielle assigns her whole life policy to the
LeRoi Foundation. The policy has a CSV of
$48,000 and ACB of $35,000.
• As a result, Danielle realizes income of $13,000
($48,000-$35,000) and receives a tax receipt for
$48,000 to offset the taxable income.
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Charitable Bequest
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Gift is at time of death
Flexibility to change beneficiary
Name estate as beneficiary
Will outlines the bequest funded by
proceeds
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Charitable Bequest
• Premiums are not considered a taxable
donation
• Estate can claim credit up to 100% net
income from proceeds
• Insurance proceeds subject to probate
fees
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Beneficiary designation only
• Designation is revocable so no tax receipt
for premiums
• No tax receipt for direct proceeds
Mutual Funds and securities related to financial planning services are offered through Qtrade Asset Management
Inc., member MFDA
Questions?
John Merlo BA, CFP
Tel. (250) 368-2631
Toll Free 1-877-691-5769
Fax (250) 368-2632
Email: john.merlo@kscu.com
Mutual Funds and securities related to financial planning serives are offered through Qtrade Asset Management Inc.,
member MFDA