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Family Legacy Gift

The Power of the Family Legacy Gift

Including a Family Legacy Gift in your Will can help your family leave a lasting charitable impact.

We all have charities and causes that are close to our hearts, and we support them in different ways throughout our lives, including through volunteering, fundraisers, and annual donations.

When you make a Will, you get the opportunity to make a deeply meaningful impact on these charities and causes – one that will carry on long after you are no longer here. For many people, a single legacy gift in their Will can be more impactful than all the donations they made during their lifetime!

Will a charitable gift take away from my family?

While a majority of Canadians see the benefits of legacy giving, many share a common concern – namely, that giving a meaningful amount to charity on death will take too much away from their loved ones.

Another way for people to address this concern is by choosing to make their gift a Family Legacy Gift.

What’s a Family Legacy Gift?

When an individual leaves a gift to a charity in their Will, it is often structured as a Personal Gift. A Personal Gift is a charitable gift made out of someone’s estate shortly after they pass away. When someone is married or in a common-law relationship, there is some understandable hesitancy about leaving a substantial Personal Gift to charity in a Will. After all, people first-and-foremost want to ensure that if they pass away first, their surviving spouse will have enough assets to continue to live their life.

Family Legacy Gift is a gift that is made only after both spouses/partners have passed away. This enables a couple to make a substantial charitable gift after they have both passed away, without significantly impacting the finances of the surviving spouse/partner after the first person dies. Also, structuring a gift as a Family Legacy Gift  that is made after both spouses/partners pass away can sometimes help align the timing of the gift with the sale of a family home – often the couples’ largest financial asset.

A Family Legacy Gift is included in the Wills of both spouses/partner with the condition that it only gets paid if the other spouse/partner is already deceased. So even though the gift appears in both Wills, it only gets paid once – after the death of the second spouse/partner.

Example of Family Legacy Gifts and Personal Gifts

Sam (age 72) and Cheryl (age 66) are married with two adult children. Their estate planning needs are not complex, so they decided to use an online platform to prepare their Wills. Sam and Cheryl are passionate about a number of charitable causes and make regular donations to support the organizations that are closest to them.

They like the idea of being able to leave legacy gifts in their Wills, and have three organizations in mind that they want to benefit – their church, the local pet rescue, and the children’s hospital that treated their daughter many years ago.

They’ve spoken to each of these organizations, who are all thrilled about the prospect of having Sam and Cheryl as legacy donors. The church and the pet rescue are smaller charities – there is always concern about “keeping the lights on”, so the sooner they can receive gifts, the better. The hospital is a much larger institution – they are grateful for gifts of any size, but have a legacy giving campaign in place to raise millions for future expansion.

Sam and Cheryl want to leave a total of $20,000 to the church, $10,000 to the pet rescue, and $200,000 to the hospital. They each have investments that could help fund the smaller donations, but the larger one can only be made once both of them have passed away and the family home (their most valuable asset) is sold.

Sam and Cheryl included the following gifts in their Wills.

Sam's Will

Cheryl's Will

Legacy Gift to Church

$10,000 Personal Gift

$10,000 Personal Gift

Legacy Gift to Pet Rescue

$5,000 Personal Gift

$5,000 Personal Gift

Legacy Gift to Hospital

$200,000 Family Legacy Gift

$200,000 Family Legacy Gift

Nine years after making their Wills, Sam passed away. In the course of settling his estate, the Personal Gifts that were included in his Will were paid – $10,000 to the church and $5,000 to the pet rescue. Both of these gifts were funded from Sam’s investments and didn’t affect Cheryl’s lifestyle or, most importantly, her ability to remain in their family home. Cheryl inherited the remainder of Sam’s estate including his ownership in the family home.

The $200,000 Family Legacy Gift to the hospital that was included in Sam’s Will was not paid after his death, since the condition attached to that gift (that it should only be made if Cheryl was not alive) was not met. 

Cheryl passed away seven years after Sam, and the Personal Gifts in her Will were paid shortly after. Between Sam’s estate and Cheryl’s estate, the church received a total of $20,000 in legacy gifts, and the pet rescue received $10,000.

Since Sam was not alive when Cheryl died, the condition attached to the $200,000 Family Legacy Gift in her Will was met. The family sold Sam and Cheryl’s family home to fund the legacy gift to the hospital out of Cheryl’s estate, which is what they intended. Sam and Cheryl’s children inherited the remainder of Cheryl’s estate. 

Trade-offs of Personal Gifts and Family Legacy Gifts

Sam and Cheryl were able to use Family Legacy Gifts in their Wills to make a significant donation to the hospital in a way that did not affect Cheryl’s finances or living situation after Sam passed away.

To ensure the Family Legacy Gift was made, it had to be included in both Sam’s Will and Cheryl’s Will and remain in both Wills when each person passed away. If Cheryl decided to remove the gift to the hospital after Sam died, then that gift would not have been made after Cheryl passed away. However, Sam knew that he and Cheryl wanted to benefit the hospital with their legacy gift, and was confident that Cheryl would keep the gift in her Will, even if she updated it after he died.

If someone is concerned that a surviving spouse/partner might remove the Family Legacy Gift from their Will in the future, then they may choose to leave the gift as a Personal Gift instead.

A Personal Gift does not depend on what someone else includes (or does not include) in their Will. If someone includes a Personal Gift in their Will, their executor will be obligated to fulfill that gift from the assets of the estate. While a Personal Gift gives greater assurance that it will be paid, the funds that are used to fulfill a Personal Gift will not be available to the surviving spouse/partner.

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