Life insurance is a great way to give a potentially sizable gift without costing you a fortune – other than the monthly premiums.
Depending on how you structure your gift of life insurance, you can benefit The Nature Trust after your death and also receive substantial tax savings.
There are three main methods by which you can gift life insurance to a charity.
First, you can make a bequest of the proceeds of a life insurance policy through your Will, but this will incur probate taxes and delay the gift giving until probate has been granted.
Second, The Nature Trust of BC may be named as beneficiary under a policy owned by you. In terms of tax consequences, you aren’t entitled to a charitable donation tax credit for the life insurance premiums you pay. That being said, upon your death The Nature Trust will issue a tax receipt for the life insurance proceeds it receives. The charitable tax credit may help reduce the income tax payable by your estate (for example if your estate owes capital gains tax/taxes on your RRSPs, etc.), so there is still some benefit to structuring your life insurance gift this way.
Third, you can donate a newly acquired policy or an existing policy during your lifetime. The Nature Trust owns the policy on your life and is the beneficiary which means the premiums you pay each year qualify as a tax-deductible donation on your annual income tax return – giving you the benefit of instant tax savings.
We recommend you contact your financial advisor about a gift of life insurance.