Leaving A Legacy

What it means to Leave a Legacy

Leaving a Legacy is the perfect way for you to be remembered. Legacy gifts are essentially gifts for the future, or “promised” gifts. When leaving a legacy, you promise, or “pledge”, to turn over a portion of certain funds or other capital assets you currently own to the hospital as part of your estate. When it is time to act legally on your will, the executor of your estate will distribute these assets according to your final written wishes. Your gift is an important source of long-term funding. They provide a stable and reliable stream of ongoing support that helps to keep the hospital’s future strong and secure.

Through the Foundation’s special legacy giving program, donors can provide the hospital with vital funding for such key priorities as:

• Sustaining the ongoing need for new medical equipment and technology
• Helping with recruitment and retention of physicians and professional staff
• Providing seed monies to invest in innovative new health care programs
• Meeting the growing needs of seniors in our community

Legacies also help the Foundation by creating permanently endowed funds that provide specific investment income each year. This revenue helps to bridge gaps in our annual fund raising programs.

Leaving a personal legacy is a heartfelt expression of the values they stand for – a symbol of who they are and what they believe in. Indeed, legacy gifts are often used to create permanent tributes which honour and preserve the memory of the donor – or a loved one – forever.
The following information outlines some of the ways you can make an effective gift as part of your estate plan which will benefit both the Foundation and your estate.

A Bequest
A bequest in your will is the most common way to make a planned gift. Your will is a tremendously powerful instrument which allows you to have an effect on the future for your family and your community. It is possibly the most important document you will ever create, and your opportunity to make a difference and improve the lives of future generations.

Your will allows you to distribute your estate in accordance with your wishes and to benefit organizations in which you believe. By making a tax-deductible charitable gift through your will, called a bequest or legacy, you may be able to offset up to 100% of your net income in the year of death and the year before. In doing this, you will direct money to a worthy cause that would otherwise have been paid in taxes to the government. This way, you can take care of your family and support Chatham-Kent Health Alliance.

Designating the Foundation of CKHA as a beneficiary in your will is a direct way for you to help others in your community and it takes effect when you won’t need the money any more. As a result you can often afford to give much more in your Will than you would during your lifetime. Your bequest may be cash, securities or other property. Your estate receives a tax receipt for the value of your bequest which reduces income tax otherwise payable.

You may leave three types of legacies to Foundation of Chatham-Kent Health Alliance:

• a "restricted” legacy, for a specific fund or specified area with the Alliance

• an "unrestricted" legacy, which permits the Foundation to place the funds where they are most needed at the time of the gift

• an "Endowment" legacy, which allows the Foundation to permanently invest the principal of your bequest and use the interest each year to support capital renovation/building, equipment needs, medical research, or to place the funds where they are needed most

Appreciated Securities
Gifts of appreciated listed securities are now more appealing than ever. That is because 75% of the taxable gain in a qualifying gift of securities is now exempt from taxation. Consequently, you will pay less tax on the gain when you donate, rather than sell these securities.
When you dispose of property by way of a gift, you are deemed to have received proceeds equal to the property’s fair market value. For example, if you donate securities which cost you $4,000 and which are now worth $10,000, you would recognize $6,000 of capital gain – just the same as if you sold the securities for $10,000.

Your donation receipt is for the full fair market value of the securities on the date they are transferred to the charity. Thus, in computing the amount of your charitable tax credit you get the benefit of all of the appreciation, but on your federal return you are now taxed on a small fraction of it. Consequently, your net tax savings (tax credit less tax on the gain) are larger than before.

The partial exemption from taxable gain applies to charitable bequests as well as to lifetime gifts. Thus, if you intend to make bequests to charity as well as to family members, it could be advantageous to fund your charitable bequest with appreciated listed securities and your family bequests with other assets. You can do this either by making a specific bequest of certain securities, or by empowering your executor to select the assets for the charitable bequest.

There are many factors to consider when deciding if you should make a donation of securities during your lifetime or through a bequest. Some donors, wishing to see how their gift is used and also to avoid probate fees, possible estate problems, or changes to the tax laws, opt to give during their life. Others prefer to make a bequest, because this lets them maintain full control of their assets throughout their life. Whatever route you choose, it’s important to plan it carefully, taking into account all aspects of your personal financial plan.

A Gift of Life Insurance
Have you ever thought of making a contribution to Foundation of CKHA of $10,000, $25,000, $100,000 or more? Most of us can only dream of such generosity. But is such a gift possible? Of course….

A contribution of this size is possible through a gift of life insurance. By paying a relatively small premium each year, it may be possible for you to make a major gift to CKHA upon your death. You could receive a tax receipt now for premiums you pay, or on your final tax return which can mean considerable savings. You may even have an existing policy which you would like to donate. No matter how you do it, you can assist substantially to an organization important to our community. Your dream can become a reality.

Two Ways to Save Tax

If you name the Foundation as owner and beneficiary of the policy, any cash value in the policy will be receipted for income tax purposes. In addition, any future premiums that you pay for the policy will also be tax deductible.

Alternatively, you can choose to name the Foundation as beneficiary only (not owner). In this case, the tax benefit will be realized by your estate for the full amount of the policy upon your death. Current premiums and cash values will not be receipted.

You have a choice; do you want to save tax now and in the years to come, or do you want to defer the tax savings until your death? This question is best answered with the assistance of your financial advisor after careful consideration of your financial circumstances. In either case, you will be making a significant gift while receiving significant tax savings.

Existing Policies, New Policies…They All Work

You can give an existing policy to the Foundation or you may buy a new policy. Many people have policies that they no longer need but which are paid up and thus are costing them nothing to maintain. Consider donating these policies to Foundation of CKHA instead of canceling them.
You may also donate a group policy that is provided through your current or former employer. Often, when you retire or leave the company, you can take the policy with you or convert it to a private policy. Conversion is often available without proof of insurability.
Life insurance is a great way to make a difference…for only pennies on the dollar. This could be the legacy you leave for your community.

Charitable Gift Annuities
An attractive method of giving is to buy an annuity. An annuity is a contract which pays a specified sum either now or later to you (the annuitant). Payments may be made for your lifetime or periodically such as for 120 months. Annuities may be registered so that the principal and investment earnings are tax exempt until payments are received.

You would purchase an unregistered or prescribed annuity with your after-tax income. When payments are received under such an annuity, only the interest element of the payment is taxed so you aren't taxed twice on the same income.

A tax receipt would be issued in the year your gift is made for the portion of the annuity that Revenue Canada considers to be an outright gift.

Annuity gifts are irrevocable and cannot be withdrawn. But they can be structured so you and your spouse will be paid full income until both of you die.

Examples of how a gift annuity might work for you are available by contacting the Foundation.

Charitable Remainder Trust
Essentially this is a living trust you establish by contributing cash or other property. Throughout your lifetime you will receive income from the trust, but upon your death the “remainder” will pass directly to the charity you name as the beneficiary. This approach will provide immediate tax relief to you, instead of your future estate. The trust can be set up so that the property passes to the charity only when both spouses die. It is also possible to appoint a corporate trustee to ensure the trust funds are professionally managed according to the terms of the trust.

A trust is started by contributing cash or other property, worth at least $200,000 initially or after a few contributions. Otherwise, it may not be worth the professional fees for set-up and annual administration associated with the trust.

Capital gains tax will apply if you contribute capital property with accumulated capital gains, but your tax credit may offset the capital gains tax bite. The older you are when making the contribution, the more valuable the tax relief will be.

Each year you will receive and pay tax on any income realized by the trust if it holds investment assets. The capital stays intact and goes to the charity when you die without going through probate. You cannot withdraw any capital in the meantime. Make sure to consider future financial requirements for you and your family before establishing the trust. It is important that you seek professional tax advice before proceeding with this type of arrangement.

Leaving a Legacy Today
If you are considering a legacy gift to the Foundation of Chatham-Kent Health Alliance, this is a wonderful way for you to ensure that the hospital can continue providing high quality health care to the citizens of Chatham-Kent well into the future.

It is also an act of deep caring. By using this tax-efficient giving method, your chosen charities – as well as your loved ones, of course, and any other beneficiaries you name in your Will – can benefit much more from your generosity than they otherwise would.

We have created the Exemplar Society, to recognize and honour donors who leave a legacy to the Foundation of Chatham-Kent Health Alliance. The names of all Society members will be prominently displayed on a special donor wall in the hospital’s main lobby at both the Chatham and Wallaceburg campuses. As soon as we are notified of your intention to make a legacy gift, you will be invited to join and receive appropriate recognition in the display.

Perhaps one day someone you know or love will need the care we provide. Your thoughtful generosity and legacy will help to ensure that the hospital will always be there for them when they need it.

We would also be pleased to help you and/or your lawyer or financial advisor design an appropriate legacy gift to the Foundation. Remember, all gifts are fully tax deductible under our charitable registration status.

Charitable Registration # 86741 3460 RR00001

For more information about legacy gifts, please contact:
Michele Grzebien, Executive Director
Foundation of Chatham-Kent Health Alliance
9 Ursuline Ave., PO Box 2030 Chatham ON N7M 5L9
Tel: (519)380-2859

E-mail: mgrzebien@ckha.on.ca