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Summer ’17 Make your mark

Dave's Investment Insights Newsletter – Summer 2017

Written by Dave Lee
April 26, 2017

Is it better to give to charity now, or wait and give through your will?

It’s a question I’m often asked at estate planning seminars. In private meetings with clients, a similar question arises: How much can we give to kids or charity without putting our own financial security at risk? A lot of factors, such as age, goals, income needs and taxes need to be considered to help clients determine their “safe” level of giving.

Perhaps more interesting though, is that these questions reveal a common focus on gifting from extra income that accumulates into a “surplus” of savings.

But what if I told you a surplus of savings isn’t required?

For most Canadians, and by extension for charities, the greatest opportunity to make a meaningful impact doesn’t come from disbursing excess capital or savings during a donor’s lifetime. The real opportunity is more typically found in the assets that maintain their standard of living until they no longer need them.

For example, soaring property prices have boosted the net worth and estate value of many homeowners in BC. But increasing prices haven’t necessarily increased the size of cheques homeowners write to their favourite charities.

Likewise, retirees must maintain investment portfolios designed to last longer than they’re likely to need. That’s because, on average, a population has a certain life expectancy, but on an individual basis, planning for average life expectancy means a 50% chance of running out of money. So, we must plan for longevity instead. This limits the amount of money you can safely give away during your healthy years.

As a result, if you’re a committed donor who struggles to make, say, a $100 monthly donation, you may feel that your contributions are meagre. Especially when compared with the $10,000 and $50,000 cheques that get written at fundraising events.

But if you have a house worth seven figures, you have a truly transformational ability to make your mark for the charity you love and want to help sustain. Shifting your perception about charitable contributions — from the scarcity of present day cash flow to the relative abundance of the capital you control through your will — can be a big win for everybody.

Download the Complete Summer 2017 Investment Insights Newsletter