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The Benefits Of Charitable Giving At Death

Question: I am single with two daughters I want give X% to my daughters and y% to a Charity. Will the distribution to charity reduce taxes? All my assets are liquid, no property.

If you leave an amount in your will to a registered charity, your final income tax return will be entitled to a tax credit that may be used to reduce the final taxes payable.  The credit at the federal level is 15% of the first $200 and 29% on all amounts over $200.  The provinces have a similar arrangement for provincial taxes.

Normally, a charitable donation may only be deducted up to 75% of the taxpayers net income but in the year of death 100% of the deduction may be used and in some cases carried back to the prior year’s return.

If you are planning on establishing a charitable donation through your estate, I would recommend you discuss your plans with your family and then meet with an accountant and estate lawyer you are comfortable with.