Do You Have Too Much Money?

Submitted by Sara Worley & Brendan Donahue

Investment Advisors, Manulife Wealth Inc.

        Some retirees eventually decide that they have more money than they’ll ever spend or need in their lifetime. While some are content to hold on to their wealth until they die, others want to do something with it while living. But what should they do? Here are some ideas.  

Gift to family

        Those who plan to give some or all of their estate to their family upon death may wish to gift ahead of their will. Along with helping his or her family, people often find personal satisfaction in being able to see family members enjoying their inheritance. There is no gift tax in Canada, so retirees are free to gift as much and as often as they like.

        While gifts of cash money are appropriate for adults, it may not be the right way to give to young people. Consider offering to fund some or all of a grandchild’s education. Investing in their future this way allows a retiree to assist a grandchild in helping him or herself, which is a better life lesson than receiving a direct handout.  

Charitable giving

        Donating to a registered charity or other qualified donee is a nice option as it allows people to support causes that they appreciate and generates a tax credit.

        People with ecologically sensitive land can gift it through Canada’s Ecological Gifts Program. Administered by Environment Canada and made possible by the terms of the Income Tax Act, significant tax benefits are available to landowners who donate land or a partial interest in land to a qualified recipient for the purpose of the land’s environmental heritage being conserved.

Getting involved

        Towns like Invermere boast many charitable organizations, societies and service clubs that need donated time, expertise and money. These organizations are generally full of dynamic, active people who have their fingers on the pulse of what’s going on in a community but finding or raising the necessary funds can be challenging. Consider aligning with one and becoming a partner in an upcoming project they are trying to fund. Many also have charitable foundations that support their projects around the world and can offer tax receipts.  

Beware of scams

        Seniors are perhaps the largest demographical target of scammers. Why? Because seniors are thought to have more money and be more trusting than those in the work force. As financial scams often go unreported and can be difficult to prosecute, retirees who fall victim to these scams often have little recourse.

        To help combat this risk, people should only give money to reputable charities and organizations. One way to do this is to keep it local, or only give to well-known charities, such as World Vision Canada.

        When identifying suitable charities, however, care should be taken to ensure that the one you are giving to is truly the one you think it is. A lot of disreputable charities disguise themselves to sound like reputable ones. For help in determining the right charity or check out their credentials, ask others for help or visit an advocacy website such as Charity Intelligence Canada, which provides information about Canadian charities’ objectives and financial activities. Visit them at www.charityintelligence.ca.

Final thoughts

        Before considering gifting or donating money, it’s important to ensure that you truly have enough. Consult with your financial advisor to make sure. If gifting is truly a possibility, your advisor can help to devise a gifting plan.

        While there is no gift tax in Canada, there may be tax owing upon the disposition of stocks, bonds or mutual funds in an investment account. Your financial advisor can help ensure that your gifting activities are structured in a way that ensures optimal cash flow and favorable taxation.