RRSPs & RRIFs
Donating Retirement Funds
Next to personal real estate, registered retirement funds are the most important investment for Canadians. Using pre-tax contributions to RRSP's, Canadians can defer taxes and allow investments to grow tax free until withdrawn. Withdrawals are treated as normal income, taxable at your combined tax rate. Most people are taxed at the 30-35% tax rate during life, but upon death the entire remaining value of the RRSP or RRIF is taken into income. This means that your estate will be in the top marginal tax bracket (43.7% in BC) and almost half of every dollar in registered funds will be lost to taxes.
You can name your spouse and dependent children as beneficiaries tax-free, but ultimately the full amount will be taxed as regular income. However, you can make a charitable gift of your RRSP/RRIF and completely disinherit the taxman.
SFU has an up-to-date brochure that explains the benefits of donating RRSP's and RRIF's to create a charitable legacy. Please e-mail firstname.lastname@example.org and request a copy of Donating Retirement Funds.
How to make a gift by RRSP/RRIF to SFU
You can name a charity as partial or complete beneficiary of your account upon your passing. To make a change in beneficiary, contact your RRSP/RRIF sponsor (your bank, investment, trust, or insurance company) to determine if a change of beneficiary form needs to be completed. For some companies, a letter of direction changing the beneficiary is all that is required. Others will have a form to be completed. However, if you want to name several different charities or have a complex distribution plan for your RRSP, the issuer may not allow it citing that they should not be serving in a role more appropriately taken care of by the executor of your estate. Residents of Quebec are required to direct their RRSPs/RRIFs through their estate to make the donation of a registered fund asset; the net result is the same except for the cost of probating the estate.
It is as simple as that. In most cases and except for those in Quebec you do not need to visit your lawyer to change your Will or other estate documents.
When making the designation please use the words: Simon Fraser University - Canadian charitable registration # 11852 0725 RR0001