Help clients avoid gift-giving mistakes

Many clients wish to leave money to charities after they die. But improper planning can mean high taxation and the failure for gifts to be delivered.

So clients needs to be wary of possible traps and mistakes, say Sandra Enticknap of Miller Thompson in Vancouver, and Angela Ross of PriceWaterCoopers in Toronto.

Read: 4 questions to ask before clients put charities in their wills

At the 15^th annual STEP conference in Toronto, these two outlined common risks and challenges. Check out some of Advisor.ca’s live tweets:

#STEP2: We’re going to outline some traps you can fall into when giving money to charity. Also, some case studies

#STEP2: Question always is: where do you want the tax return credit when giving? For many, it’s crucial to have $ qualify as a gift by will

#STEP2: The rules are strict for gifts by will. Gifts have to be specific & terms for executors to make the donation must be clear

#STEP2: If giving property, the value of the property is deemed what it was at the time of death, not at time of gifting

Read: Give using community foundations

#STEP2: The total gift amount can’t be left to the discretion of executor, but how they make the donation is more flexible

#STEP2: Surviving spouses can claim gifts as part of their income in some cases, in the year their partner dies

#STEP2: If you set a minimum and maximum amount for gifts, only the minimum will be considered gifts by will (anything above is undefined)

#STEP2: CRA says if donation isn’t one-time payment, treat recipient as an income beneficiary. Deduct donation as trust income allocation

#STEP2: If a gift by will, a charity issues a receipt based on the value of the gift when they receive it, not at death

#STEP2: If receiving marketable securities, though, they value those and issue a receipt at time of death. Doesn’t matter if value changes after

#STEP2: You don’t want to give to private foundation in the case of an estate freeze

Read: When to talk philanthropy

#STEP2: In case study, Mr. X will be taxed twice; on the deemed disposition on death and on the settlement of his assets in his trust

#STEP2: If he plans for double taxation, he can reduce disposition at death using terminal return & plan out how trust assets are handled

#STEP2: He can also make sure donations are treated as gifts by will so can leverage tax credits