As a part of estate planning, a gift of the funds remaining at death in your registered retirement savings plan (RRSP) or Registered Retirement Income Fund (RRIF) can help you realize substantial tax savings for your estate and, at the same time, allow you to make substantial difference in the lives of those served by the Fort St. John Hospital Foundation.
Under normal circumstance, the funds reaming in your RRSP or RRIF at death are included in your taxable income in the final year of life, unless you transfer them to your spouse. This means that your estate will have to pay the income tax on all the funds remaining in your RRSP or RRIF and only the after tax amount will be available to be transferred to your intended beneficiaries.
You can reduce the amount of tax payable by your estate by designating a registered charity, such as the Fort St. John Hospital Foundation as a beneficiary of your RRSP or RRIF.
Here is an example of how this works:
Ms. Martin died on August 1, 2012. Her net income at death not including her RRSP, was $200,000. She had no spouse and owned an RRSP valued at $150,000. The following illustration shows the difference in tax payable by Ms. Martin’s estate depending on whether or not she had designated the Fort St. John Hospital Foundation as the beneficiary of her RRSP.
|No Designation||Fort St. John Hospital Foundation designated as beneficiary|
|Donation tax credit||n/a||(65,550)|
|Tax payable @ 43% (BC)||152,950||87,400|
|Total to estate and FSJHF||$197,050||$262,600|
In the above example, through RRSP designation, Ms. Martin ensured that her estate saved $65,550 in income payable and, at the same time, contributed $150,000 to the Fort St. John Hospital Foundation.
Through a designation of your RRSP and RRIF funds to a registered charity, like the Fort St. John Hospital Foundation, your estate will realize savings not only in income tax but also in probate tax payable. To get the best plan for you, we recommend that you consult your tax and financial advisors before you finalize your estate plan.
When considering whether to designate a charity, such as the Fort St. John Hospital Foundation, as the beneficiary of your RRSP and RRIF, you may wish to think about and discuss the following with your financial advisor.
- The value of your RRSP or RRIF;
- Whether you would like your spouse to benefit from your RRSP or RRIF after your death;
- The value of your other assets;
- Whether it would be beneficial for you to directly designate the charity as the beneficiary of your RRSP or RRIS to avoid having your RRSP or RRIF proceeds flow into your estate;
- The portion of your estate that you would like to donate to a charity in light of the tax benefits of making the gift;
- The correct legal name of the charity you have chosen.
Designating a charity, such as the Fort St. John Hospital Foundation, as the beneficiary of your RRSP or RRIF is easy. Simply contact the financial institution holding your RRSP or RRIF and ask for a beneficiary designation form. Staff at the Fort St. John Hospital Foundation can help you complete the beneficiary designation form to ensure that your wishes can be carried out. Your gift will contribute to enhancing the Fort St. John Hospital and Peace Villa Facility.
For more information and to speak to someone personally and confidentially about making a gift, please contact:
The above information is general in nature and is not legal or tax advice. We can help you realize your wish to support our hospital by working with you and your financial and legal professional advisors.