Issue link: http://digital.canadawide.com/i/171519
Giving 101 – Ask an Advisor family wealth, family values | BY RIC LANGFORD "What can I do to teach my children to manage their inheritance?" This is an excellent question. Too often there is a reluctance to discuss financial matters with family, but open communication between parents and children is critical in preparing everyone for the transfer of wealth. The word "wealth" comes from the Middle English weal and originally included not only the concept of prosperity, but also the concepts of well-being and happiness. Thus, preparing children for a transfer of wealth should also include passing along beliefs and values. Involving children and grandchildren in philanthropy is an excellent way to do this. Private foundations are one way of achieving this, and can be established to reflect a family's values and priorities. However, setting up and maintaining a private foundation requires a significant commitment of time. A less time-intensive option for philanthropic giving – one that is becoming more popular – is the "donor-advised fund" offered by community foundations such as Vancouver Foundation. You can establish this type of fund with as little as $10,000. Once it is set up, you can make annual contributions p30-31_donors_advisor.indd 31 and apply the resulting donation tax credits against your income tax owed in that year. This can provide ongoing lifetime tax benefits and, on your passing, the fund can be increased from your estate. Community foundations can take care of all the administrative details of setting up and maintaining a fund, including arranging for payment of grants, at a very low cost. They can also provide suggestions for projects of special interest or research particular organizations or charitable activities. As with a private foundation, the power of a donor-advised fund is the ability to use the investment income to support charitable organizations of your choice. Family members can help research charities that are of interest and projects that meet the family objectives. This is a wonderful opportunity for parents and children to learn from each other, and to gain perspective on what's important to the family. VF Ric Langford, LL.B, is the director of wealth planning at BMO Harris Private Banking. He has more than 25 years experience providing professional services in estates and trusts. 12-10-16 11:30 AM