Gifting RRSPs and RRIFs

Word & Deed - Planned Giving: Gifting RRSPs and RRiFSRRSPs and RRIFs are handy vehicles that, during your lifetime, allow you to manage your taxable income in any given year. However, upon death, they can become a problematic tax liability. For example, if one does not have a spouse to transfer an RRSP or RIF to, the funds within the RRSPs or RRIFs become fully taxable in the year of one’s death.

In light of these circumstances, the Income Tax Act now permits donors to name a charity as a beneficiary of their RRSPs and RIFs. In this scenario, the proceeds of the RRSPs and RIFs are paid directly to the charity on death.

There are two ways that you can donate your RRSPs or RRIFs to Word & Deed:

1. You can designate the charitable organization as the beneficiary directly with the RRSP or RRIF holder. This is generally the preferred manner, as the gift of the RRSP or RRIF then becomes completely independent of your will and results in a very simple process.
2. You can make a provision in your will that specific RRSPs or RRIFs owned by you are to be paid to certain charitable organizations. This is often used when the RRSP or RRIF account is substantial and you would like the funds of the account divided between several charities or only a portion of the value to go to charitable organizations. The process of making this gift is often somewhat more complex as the RRSP or RRIF holder will require formal proof of the executor of the estate and their authority to deal with the assets of the estate.

Upon receipt of the gift, Word & Deed will issue a tax receipt for the value received from the RRSPS and RIFs to the estate of the donor. The tax receipt can then be used to offset the tax liability that accrues on death from the disposition of the RRSPs and RIFs.

For additional information please see this helpful article: RRSPs, RRIFs and Charitable Giving

Benefits of gifting RRSPs or RRIFs to Word & Deed:

1. W & D receives a significant gift to continue its work in God's kingdom.
2. These gifted assets don't have to pass through the estate to be eligible to receive the tax receipt in the year of death.
3. If the funds are not being transferred to a spouse or dependent child, by gifting it to Word & Deed you ensure that the value of the RRSP or RRIF will not be substantially absorbed by tax liabilities.


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