Common Sense

Passing on your estate

Written by Jack Oosterveld

There was a man who dearly loved God. God had blessed him with an estate worth $1,000,000. He wanted to leave one quarter to his local church and asked for the most effective way to do this. He wanted to give $250,000 on his death to his local church and wanted to know how to amplify the amount and still be tax effective.

By simply repositioning that $250,000 into a life insurance policy instead, he could leave much, much more. Based on his age, he could turn that $250,000 into a guaranteed life annuity, which would then pay the premiums on $2.5 million dollars life insurance policy.

This would result in four benefits
All life insurance premiums would be tax deductible each year while he is living
10 times the amount would go to the church tax free
His heirs don't have to handle the transaction (no probate)
The church can plan accordingly

This is just one example of how you can pass on money to a charity and make it more tax effective and help the amount grow to a lot larger than the original amount. He could, under Canadian tax rules, leave 100% of his RRSP or RRIF (essentially tax free) to a charity instead of having to pay taxes on it as regular income. If he had shares, he could donate them and receive a good tax break as well.

Proper estate planning with a licensed professional can help you to give more to the church than your previously thought possible.

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Common Sense Financial Ministries
22 Menlo Cres. Sherwood Park, AB T8A 0R9
phone: (780) 467-8031 (7283) fax: (780) 464-6564

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