With a little thought, many of us could become philanthropists as we reach our golden years.
By redirecting your Registered Retirement Savings Plan (RRSP) or your Registered Retirement Income Fund (RRIF), you can create a lasting legacy and support your charity of choice for generations to come. There is no cost and no lawyers involved. It is a very easy but impactful way to give with so many benefits. Simply ask your financial institution to change the beneficiary designation to your charity of choice.
Donating your RRSPs and RRIFs can provide you with tax advantages as they can become fully taxable as income in the year of death. This usually happens at the highest marginal tax rate, unless the funds can be rolled over to a surviving spouse or a dependent child. By naming a charity as one of the beneficiaries of your RRSP or RRIF, a tax credit is provided to your estate resulting in more equity to share with your loved ones. With a charity as a beneficiary, it gives you the ability to retain the use of the investment throughout your lifetime.
Your decisions are not set in stone, you have the flexibility to add or change multiple charities as beneficiaries, as well as including your heirs. Additionally, for peace of mind should your financial situation change, it is revocable and can be altered. If recognition is important to you, there is also the opportunity to be recognized and honoured in your lifetime. All gifts are personal and can symbolize a lasting memorial for you, your family, a specific cause or anyone you may wish to honour.
For example, gifts of this kind have helped The Hospital for Sick Children give lifesaving care to more than 100,000 kids every year. When redirecting RRSPs and RRIFs, the funds are not subject to probate costs or to delays in settlement since they are excluded from probate, legal, and executor fees.
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