Roadmap to Effective Testamentary Charitable Giving

  • 27 février 2024
  • Rami Aziz, Aziz Law Professional Corporation

On January 17, 2024, the OBA’s Trust and Estates section hosted a panel of experts to discuss the issues and opportunities presented in testamentary charitable giving. Program chair Gosha Sekhon of Sekhon Legal Services, started by inviting the speakers, Adam Aptowitzer from KPMG Law LLP, Hayley Peglar from WeirFoulds LLP, and Malcolm Burrows from Aqueduct Foundation to share their insights from the perspectives of the planning lawyer, the litigation lawyer, and the receiving charitable organization.

Gifts in Kind and the Importance of Adequately Investigating the Testator’s Assets

It is important to investigate the testator’s assets related to unique property. The idea is that drafting lawyers should turn their minds to the prospect that the testator may overlook various unique real and personal properties, which, if donated, could create tax credits to offset the increased tax on death due to the deemed disposition. It was noted that prior to planning the donation of a gift, it should be confirmed first that the charity will accept the gift. Additionally, the donation must be to a registered charity, not a person within the organization, to ensure the donation tax credit is not missed. Examples of unique property that a testator may overlook include loyalty program points, wine collections, private company shares, insurance policies and business inventory.

Gifts which are sometimes overlooked include the donation of certified cultural property and the donation of ecological property. Cultural property can include paintings, sculptures, books, manuscripts, or other objects, while an ecological gift is a donation of ecologically sensitive land or an eligible interest or right in the land. In the case of a cultural property, the first step is to find a designated institution (designated by the Minister of Canadian Heritage), such as a museum, which agrees to accept the item to be donated. The Canadian Cultural Property Export Review Board (CCPERB) must certify the gift. Ecological property must be certified by the federal Minister of Environment. One of the additional benefits of donating cultural or ecological property to a designated institution is that the donor does not realize the capital gains resulting from the deemed disposition associated with the donated property on death.

One last type of gift is a residual interest gift. This is an arrangement where the individual irrevocably donates real property or personal property to a charity while retaining the right to use the property for life or a set number of years. The advantage to this type of gift is that the individual retains the use of the property for the duration of their lifetime while receiving the charitable tax credit at the time the gift is made.