Types of charitable bequests
- A specific bequest: a fixed amount or identifiable asset;
- A residual bequest: all or a percentage of the remainder of the estate after the payment of debts and specific bequests;
- Designating a charity as contingent beneficiary in the event of death of the primary beneficiary;
- Universal bequest: all of the assets, sometimes divided among many
beneficiaries; - Designating a charity as beneficiary of an RRSP, RRIF or life insurance policy;
- A simultaneous death clause whereby the charity inherits, should all the
beneficiaries die at the same time.
As an example, Mary has enjoyed peaceful walks throughout the Botanical Garden for over three decades. She discusses with her children, Lucy and Mark, her intention of leaving $50,000 to the Garden she loves so much. They know that the cost to their inheritance will be $12,500 each and not $25,000.
| Mary’s bequest | |
|---|---|
| Value of the estate | $500,000 |
| Mary’s gift to the Botanical Garden (10%) | $50,000 |
| Donation tax credit (50% rate) | $26,464 |
| Value of donation tax credit to each heir | $13,232 |
| 45 % of the estate value to each heir | $225,000 |
| Inheritance of each child | $238,232 |
| Value of the estate post-donation | |
|---|---|
| Lucy | $238,232 |
| Mark | $238,232 |
| Gift to the Botanical Garden | $50,000 |
| $564,464 | |
