If you are fortunate enough to have earned – or inherited – more than you need to live out your definition of the “good life,” you’ll have the opportunity to decide where and how to direct the funds left unspent.

It is common to leave an inheritance to family members with perhaps a portion going to a valued charity.

Related: Are you counting on an inheritance?

Unlike the U.S., Canada has no estate or inheritance tax, but death can trigger a significant tax bill when assets are sold or there is a “deemed disposition.”  As well, provinces charge probate fees.  For example, on an estate valued at $250,000, probate fees can be as low as $400 in Alberta and in excess of $3,000 in Ontario.

Many people purchase life insurance to cover these expenses.  If the estate is quite considerable assets can be transferred to a family trust.  You’ll want to get expert legal advice when formulating a sound estate plan.

Leave a Legacy

An investor with a surplus of funds beyond lifetime wants and needs can have the opportunity to make a difference to others.  But instead of waiting until death to disperse your assets, why not make your gifts to those people whilst you are still alive?

Not only can you save substantially, you’ll have the satisfaction of seeing how the recipients benefit from your contributions.

If family is important to you, you can:

You can make thoughtful choices concerning your wealth and think about the affects on the lives of the people who are important to you.  You can help family members when they need it most.

If education is important to you, you can:

  • Pay university costs for your children or grandchildren, or a great kid who can’t afford the education of his or her choice.
  • Contribute to a scholarship, or establish one of your own.

If philanthropy is important to you, you can:

  • Support a hospital, shelter, etc to help those in severe need.
  • Fund the arts – music, theatre, and artistic works – that enrich our lives.
  • Support national, global, or community organizations.

Think of it as investing in your values to make good things happen for and through the people and organizations you care about.

Related: When do what you love doesn’t pay the bills

If I had money I would start charitable foundation.  I could then decide which individual projects and programs I would support, rather than my money going into a big fundraiser pot.  I know I would derive a great deal of gratification to know my resources were making a difference to the things and people I care about.

Caveat

Make sure your own financial needs are 100% taken care of before considering early inheritances.  That includes sufficient retirement income, long-term care needs, and, of course, you should be debt free.  You don’t want to deplete your resources only to become a financial burden on others.

Related: Retire your debt before you retire

To mitigate any possible family ill will, try to equalize your giving.

Be aware that giving capital property – real estate or investments – can trigger capital gains tax, as the property will be deemed to have been sold at fair market value.

Final thoughts

If your finances are in good shape you can share the wealth while you’re still around to enjoy helping others. You may find you enjoy great satisfaction in converting your financial resources into actions and values you truly care about and making a positive difference in people’s lives.

If you plan carefully, you can reduce your taxable estate and provide advance help to your beneficiaries.  It will be welcome for the recipient and satisfying to the giver.


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