Plan to Make a Difference


Date: 01/04/2018

By Jay Stark

At Sutton Financial Group, we show successful entrepreneurs and professionals how to preserve, protect, and pass on their wealth so that they can impact their world in a meaningful way. And yet when I reflect on my past 20 years as a donor, volunteer, board member and as a financial advisor with a specialty in philanthropy, when it comes to charitable giving, despite their best intentions, people sometimes fail to achieve the best results.

I want share one common error that can diminish the impact that we want to have on our family and the causes that are important to us:

Not understanding that your RRSP or RRIF will be your most highly taxed asset … eventually.

For most Canadians, it is smart financial planning to contribute to a Registered Retirement Savings Plan (RRSP) and convert it to a Registered Retirement Income Fund (RRIF) when you are 71. Unfortunately, when you die, assuming you have no spouse to whom you can transfer your registered assets, your estate could be in for a massive tax bill. Why? Because all the assets in your RRSP or RRIF will be taxed as income in the year of your death. For many of us that means our friends at Canada Revenue Agency will take almost half the value! Fortunately, with some advanced planning including philanthropy, you can reduce or even eliminate this tax liability.

Think making a bequest is a hassle? Getting a lawyer involved is too much time and money? Well, here’s a philanthropic strategy that takes about one minute to complete, costs nothing, and involves no lawyers. Using either your RRSP or RRIF you can implement The 60 Second BequestTM in three easy steps.

1. Request an RRSP/RRIF Multiple Beneficiary Designation form from your plan administrator.

2. Complete the form naming your charity or charities of choice as one or more of the beneficiaries.

3. Return the form to your plan administrator.

Take Note: not every employee of the financial institution with whom you are dealing may be familiar with a Multiple Beneficiary Designation form. Rest assured that it does exist ... just keep asking until you are dealing with someone who knows where to find one.

If you are interested in learning more about the other common errors people make when giving to charity, please visit our website to download a copy of our special report.

One final thought. Ernest Becker in his Pulitzer Prize winning book, The Denial of Death, wrote, “What man really fears is not so much extinction, but extinction with insignificance.”

We want our lives to matter… We want to have made a difference. Take the time to make wise decisions and avoid the errors that so commonly diminish the significant contributions people make.

First published in the Spring 2018 edition of Promise Magazine.

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