Donating registered assets such as a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF) is an effective way to reduce the taxes payable by the donor’s estate.
RRSPs and RRIFs often create large tax liabilities for a taxpayer in the year of death, since the entire amount of the plan is included in the taxpayer’s income in one year. If your RRSP or RRIF has the The WHS as the direct beneficiary, your estate will receive a donation receipt for the entire value of the plan. The credit arising from this donation will offset the tax liability. As a result, the entire value inside an RRSP or RRIF can be given to a registered charity in the year of death with no tax implications. A gift of a RRSP or RRIF may enable you to support The WHS while reducing the amount of taxes that your estate would otherwise have to pay.
There are two ways to donate the proceeds of an RRSP or RRIF:
- You can name the WHS as the direct beneficiary of your RRSP or RRIF. Upon death, the proceeds will be paid directly to The WHS without going through probate.
- You can name your estate as the beneficiary of your RRSP or RRIF and leave instructions in your Will to donate all or part of your RRSP or RRIF to the The WHS. You can specify a percentage of the RRSP or RRIF or a specific dollar amount to be donated. The donation qualifies for the charitable tax receipt for up to 100% of income in the year of death and in the year preceding.
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