Tax sheltered retirement funds are amongst the most heavily taxed assets you own. At death, all the assets of an RRSP/RRIF/Tax Free Savings Account will be taxed as income on the deceased’s final tax return. As a result, almost half of the retirement plans’ assets could will usually be lost to taxation unless a charitable gift is made. If the gift of the entire RRSP/RRIF is made, the tax receipt will more than offset the taxes owing. If even a portion of the RRSP/RRIF is given, most or all taxation on the RRSP/RRIF can be eliminated. Assets of a Tax Free Savings Account (TFSA) can also be made as a charitable gift and a tax receipt will be provided for the full value of the TFSA and can be used to offset any taxes owed by your estate.
- Through careful planning, you can offset some or all of your final these taxes if you make The Oshawa Hospital Foundation the direct beneficiary of your RRSP/RRIF or Tax Free Savings Account.
- If your RRSP/RRIF/TFSATax Free Savings Account transfers to a living spouse, then consider making The Oshawa Hospital Foundation the beneficiary upon the death of the second spouse.
- If you have already converted your accounts, you can still make a charitable gift of all or a portion of any funds remaining at death.
How do I establish this gift?
Make a gift to The OHF through your will Will by designation as direct beneficiary, or as beneficiary upon the passing of the second spouse. The tax treatment is equally effective using either strategy.in both ways.
What are the benefits to me?
- This type of gift cannot be contested in your Will. Name The OHF as beneficiary means that it will bypass your estate, avoids probate fees and taxes that would otherwise be charged.
- Since this gift lies outside your estate, you can preserve your privacy and wishes from other family beneficiaries.
- The OHF will issue a tax receipt for your final tax return for the value of the donated RRSP/RRIF/TFSATax Free Savings. Donations can be claimed against 100% of net taxable income in the year of death. If the donation is larger than the tax liability too large, it is possible to carry back donations to claim against 100% of the net taxable income in the preceding year. The contribution has the potential to eliminate all tax in the final two years if the gift is large relative to the income.
*Any gift planning should be done in consultation with your financial and/or tax advisor.