At risk of being cliché, I want to open by looking at how legacy is literally defined in the dictionary. Cambridge Dictionary has two parts to their entry for “legacy”:
- Money or property that you receive from someone after they die
- Something that is a part of your history or that remains from an earlier time
… But for me, neither of these quite cuts it. I actually found my favourite definition in possibly the least likely of places, UrbanDictionary.com. They define “legacy” like this:
“It's planting seeds in a garden that you never get to see.”
How beautiful is that? I love this metaphor because it gets at something that I think is often misunderstood about leaving a legacy. Your legacy isn’t just about immortalizing yourself the way you want to be remembered (although that can definitely be part of it, if you want). It’s also about leaving something behind that will continue to make the world a better place, even after you’re gone.
Legacy Giving Through Your Will
When we leave a legacy in our Last Will & Testament, we are leaving behind a piece of ourselves. Not just money, but a gesture of our love, devotion, obligation, and hope.
Pretty much everybody who has a Will uses it to leave their money and assets to people they care about. Obviously, I’m all for that, and I’m a huge advocate for everybody over age 18 to make sure they have an up-to-date Last Will & Testament in place.
But I also think we need to expand our understanding of what Wills are for. Specifically, what we all need to consider doing more is leaving a legacy gift in our Wills to a charitable foundation.
A lot of times, people think that leaving a charitable gift in their Will is unfair to their families, who might otherwise inherit that money. First of all, I would argue that we should be teaching our families about the importance of supporting those less fortunate. But perhaps more importantly, as long as you’re planning ahead, you don’t have to choose between your family and your wider community. The Canadian Government has created various tax incentives for leaving a charitable gift in your Will, meaning that being generous with your legacy doesn't just benefit your wider community; it also maximizes the value of the Estate that your loved ones will get to inherit.
Also consider that if you don’t specify otherwise in your Will, your Estate tax dollars will be allocated according to the government’s default scheme, something known as “involuntary philanthropy.” If that money is going to be directed towards taxes anyway, why not ensure that it will go toward causes that you personally hold dear?
Leaving a Charitable Gift in Your Will
Legacy giving, sometimes known as planned giving, is something that is usually done (or at least should be done) in coordination and collaboration with the charity you’ve chosen to support. The charity you've chosen likely has some staff members who work in planned giving, meaning they'll have expertise in the tax and legal concerns that may come up in relation to your gift. Although they cannot give you financial or legal advice, they'll likely be able to recommend an excellent accountant and lawyer to support you in the process of establishing a legacy gift in your Last Will & Testament.
We have a whole blog post about how to leave a charitable gift in your Will, but to sum up, there are several ways you can go about doing this. You can set up a donor-advised fund; you can designate a charity as a beneficiary of an RRSP; you can donate real estate; and more. Although you can also donate simple cash, your donations will be much more efficient if they come in the form of appreciated securities. Talk to your Legacy Coordinator & other financial professionals to figure out which option is best for you and your goals.
Keep Your Loved Ones Informed
If you’re going to leave a sizeable gift of any kind outside of your immediate family, whether that be to a person or a charitable organization, I always suggest that you involve your family in that process.
Why bother having this conversation? First, because you don’t want to blindside anybody with the news that the proceeds from your Estate won’t entirely be going to family. But also because this gives them an opportunity to get involved themselves, and to understand why this cause is so important to you.
Make sure you take the time to explain to them why it is you’re making this choice. Encourage them to be a part of telling the person or charity you’ve chosen. Maybe even encourage them to do the same in their own Last Will & Testaments.
Last Words
Currently, Baby Boomers and the Silent Generation make up around 35% of the Canadian population. That means we’re on the precipice of a massive transfer of wealth from the older generations to the younger ones.
We’re also living through complicated times (to put it mildly). Today’s older adults experienced an era of unprecedented prosperity; through hard work and determination, they built incredible lives for themselves and their families, the younger members of which now face a very different, much more turbulent world. We all owe it to each other to try to make this world a better place for the people who come after us—and charitable giving is one of the easiest ways we can do that.
