“To pity distress is but human; to relieve it is Godlike.”
Horace Mann
The words of American education reformer Horace Mann (1796-1859) ring true today for estate planning and charitable giving in Canada. His quote encapsulates philanthropy’s spirit – empathy for others and taking action to alleviate suffering.
Mann devoted his life to social reform causes. His quote inspires us to follow in his footsteps, using our wealth and privilege to lift others in need.
Page Contents
- 1 About Horace Mann, the Father of Public Education
- 2 Using Wealth to Lift Others in Need
- 3 The Potential for Charitable Giving in Canada
- 4 Motivations for Charitable Estate Planning
- 5 Charitable Vehicles to Consider
- 6 Significant Tax Rewards
- 7 Charitable Planning Scenarios
- 8 Making Your Charitable Vision a Reality
- 9 Take Action to Leave a Legacy of Compassion
About Horace Mann, the Father of Public Education
Horace Mann was born in Massachusetts in 1796. He became an early advocate for public education, serving as Secretary of the Massachusetts State Board of Education from 1837 to 1848.
Mann championed reforms like better school facilities, higher pay for teachers, and secular curriculums. He helped bring about the common school movement, spreading public education across the US. This earned him the title “Father of the Common School.”
After retiring from education reform, Mann was elected to Congress in 1848. He continued advocating for social causes, like improving the treatment of the mentally ill and abolishing slavery.
Mann died of typhoid fever in 1859 at age 63. His legacy lives on through the public school system, a testament to his reform efforts.
Using Wealth to Lift Others in Need
Mann’s quote speaks about going beyond just feeling sympathy for those suffering – taking action to make a difference. Charitable estate planning is a powerful tool for those of us with wealth and assets.
The Potential for Charitable Giving in Canada
Canadians have a net worth of over $11.7 trillion (source: 2020 report from the Office of the Parliamentary Budget Officer) and donated about 1% ($11.8 billion in 2021, according to Statistica).
With mindful planning, Canadians have enough wealth to provide for loved ones and make significant charitable gifts. Charitable giving often increases happiness more than increased personal spending.
Motivations for Charitable Estate Planning
What motivates Canadians to give charitably through their estates? Here are some of the top reasons:
- Giving back to causes they care about
- Supporting organizations that make a difference
- Leaving a positive legacy that reflects their values
- Gaining tax rewards that maximize their estate value
- Replacing assets going to charity with life insurance proceeds
Charitable estate planning allows people to make transformational gifts with much more impact than ongoing donations.
Charitable Vehicles to Consider
There are several ways to make charitable estate gifts:
- Bequest in your Will – Direct assets like cash, stocks, or property to your chosen charity upon death.
- Registered funds – Naming a charity as the beneficiary of your RRSPs or TFSAs provides tax-effective gifts.
- Life insurance – You can name a charity as the beneficiary of a new or existing life insurance policy.
You can also replace other assets going to charity with life insurance proceeds. This allows you to make a sizable charitable gift without reducing inheritances for your heirs.
Significant Tax Rewards
Charitable estate planning has excellent tax advantages. Charitable gifts over $200 made through your Will receive a donation tax credit.
For example, a $100,000 estate gift could generate a $40,000 credit to reduce taxes owed on death. Any excess credits could be used in the prior year or the following five years.
Capital gains tax is also eliminated on appreciated assets like stocks gifted to charity.
Charitable Planning Scenarios
To understand how charitable estate planning works, let’s look at a few examples:
John, 65, wishes to donate $500,000 to charity through his Will.
This gift gives John a $215,000 donation tax credit. This significant credit can reduce taxes payable on death, maximizing the value of his estate.
Mary, 72, plans to gift her cottage worth $800,000 to charity.
As an appreciated capital property, Mary’s cottage carries a tax liability if sold. By gifting the cottage through her Will, she eliminates an estimated $120,000 in capital gains tax. This increases the amount ultimately going to charity.
John and Mary have a $1M life insurance policy and rental income properties.
They intend to gift their rental properties to their children through their Wills. To replace the value of this gift, they can name a charity as the beneficiary of their $1M life insurance policy. This allows them to provide for family and make a substantial charitable gift.
As these examples show, charitable planning provides creative solutions that benefit families and philanthropy.
Making Your Charitable Vision a Reality
Once you’ve decided to make a charitable estate gift, how do you make it happen? Here are some steps:
1. Identify Your Passions
What causes stir your heart? What issues do you want to impact? Take time to reflect on what really matters to you. This self-discovery lays the foundation.
2. Research Organizations
With your passions in mind, investigate which charities align with your vision. Explore their track records, programs, and the impact of gifts.
3. Consult Your Advisors
Meet with your financial planner, accountant, lawyer, and Taxevity Insurance advisors. They can help you craft a charitable plan integrating your overall goals.
4. Document Your Intentions
Formalize your charitable wishes through your Will and beneficiary designations on registered accounts or life insurance. This ensures that your gifts go where you intend.
5. Share Your Plans
Communicate your charitable plans with your family and the recipient charities. Each then gets insight into your values and the future impact you wish to make.
With thoughtful planning, you can craft a meaningful charitable legacy reflecting what’s most important to you.
Take Action to Leave a Legacy of Compassion
Like Horace Mann, we all have the power to relieve suffering through your philanthropy. With mindful estate planning, you can provide for your loved ones and make transformational gifts to causes close to your heart.
Your team at Taxevity Insurance helps you integrate charitable giving into your estate plan while minimizing taxes. We provide complimentary consultations to craft a customized plan that reflects your values and priorities.
Whether you wish to support medical research, help disadvantaged youth or nourish the environment, charitable estate planning allows you to make an incredible difference. Contact us today to start shaping your compassionate legacy.
Let us follow Mann’s inspiring words, using our wealth to lift others. Give the gift that will continue changing lives for generations to come.
Learn how the Will Power campaign helps you include a gift to charity in your Will and about the pros and cons of donating life insurance.
Written by your family team
An actuary and family enterprise advisor who became an insurance advisor at Taxevity Insurance, a family practice.
A Certified Financial Planner who became an insurance advisor at Taxevity Insurance, a family practice.
