Charitable Bequests in Canadian Wills — Practical Guide
A charitable bequest in a Canadian Will is one of the simplest and most tax-efficient ways to support causes you care about. This guide covers the types of bequests, the tax mechanics, and the drafting details that prevent gifts from going wrong.
Types of charitable bequests
Specific dollar amount. "I leave $25,000 to [Charity]." Simplest form. Drawback — fixed amount may shrink in real terms relative to an appreciating estate.
Percentage of estate. "I leave 5% of my residual estate to [Charity]." Scales with estate growth or decline. Often used when intent is "a portion" rather than a fixed sum.
Specific asset. "I leave the RRSP account at [Bank] to [Charity]." Tax-efficient for assets that would otherwise be fully taxable at death (RRSPs/RRIFs).
Residual. "After all specific bequests, debts, and taxes, I leave the residue of my estate to [Charity]." Common when no individual beneficiaries.
Contingent. "If my spouse predeceases me, I leave $50,000 to [Charity]." Triggered only if a primary beneficiary doesn't survive.
The tax mechanics
When a Canadian dies, all capital property is deemed disposed at fair market value (the "deemed disposition"). This often triggers significant capital gains tax on the final return. Charitable bequests offset this tax.
Donation receipt. The charity issues a receipt for the value of the gift.
Claimed on the final tax return. The donation tax credit is claimed on the deceased's final T1 return. The credit equals roughly 40-50% of the gift amount in most provinces (federal credit + provincial credit combined).
Up to 100% of net income. The credit can offset up to 100% of net income in the year of death and the immediately preceding year (per CRA).[1] This is a much higher limit than the 75% that generally applies to living donors.
Practical effect. For a $100,000 charitable bequest, the deceased's estate saves roughly $40,000-50,000 in tax. The "real" cost of the gift to the estate is around $50,000-60,000.
Naming the charity precisely
Use full legal name plus CRA Business Number:
"I leave Fifty Thousand Dollars ($50,000) to The Canadian Cancer Society (Charitable Business Number 118829803 RR0001) for its general purposes."
The BN ensures the right entity receives the gift even if:
- The charity changes its operating name
- A similarly-named charity exists
- The charity merges with another organization
Look up Canadian registered charities and their BNs at CRA's List of charities.
Gift-over clause — what if the charity ceases to exist
Charities can deregister, merge, or dissolve between when a Will is signed and when the testator dies. A gift-over clause directs what happens:
"If The Canadian Cancer Society is no longer a registered Canadian charity at the date of my death, this gift shall instead be paid to The Princess Margaret Cancer Foundation (BN 88900 7597 RR0001), or, failing that, to a registered Canadian charity supporting cancer research selected by my executor."
Without a gift-over, the gift may fail and fall into the residual estate (or to intestacy if no residue clause).
Restricted vs unrestricted gifts
Unrestricted (general purposes). The charity uses the gift wherever the need is greatest. Most flexible for the charity.
Restricted (specific purpose). The gift must be used for a stated purpose. Risk — if the purpose becomes impossible or impractical (program discontinued, area of research no longer pursued), the gift may fail or require court approval to redirect.
Compromise wording. "I leave $50,000 to [Charity] preferably for [purpose], but at the discretion of the charity if that purpose is no longer being pursued." Gives the charity flexibility while expressing intent.
Discussing with the charity in advance
For larger gifts (typically $25,000+), most Canadian charities have planned giving offices that can:
- Confirm correct legal name and BN
- Help with precise wording
- Ensure the gift can be used as intended
- Discuss recognition options (named program, named fund, named space)
- Coordinate timing if the gift is a specific asset (life insurance, real estate, securities)
Pre-notification is courteous, helps the charity plan, and prevents disputes about intent. Smaller anonymous gifts typically don't need pre-notification.
Common drafting errors
Informal charity names. "I leave $10,000 to the cancer charity." Ambiguous; can fail.
No gift-over. Charity dissolves; gift fails.
Over-restrictive purpose. "Only for left-handed research in May" — purpose impossible; gift fails.
Conflict with other Will provisions. Specific bequest exceeds available estate after debts and taxes.
Missing residue clause. Specific charitable bequests are fine, but the residue clause covers everything else; without one, residue falls to intestacy.
What we focus on at It's Simple Will
The Will Creator includes a Charitable Bequest module that captures gifts (specific dollar, percentage, residual, gift-over), uses the proper Canadian charity naming convention, and generates the gift-over language. The Charity Guide Wizard helps if you know you want to give but don't know who.
Related guides
Citations & sources
- [1]Canada Revenue Agency — Charitable donations made by deceased — Canada Revenue Agency
- [2]CRA — List of charities — Canada Revenue Agency
- [3]Imagine Canada — nonprofit sector resources — Imagine Canada
Frequently asked questions
What's the best way to leave money to charity in my Will?
Depends on goals. Specific dollar amount is simplest but may shrink relative to estate over time. Percentage scales with estate growth. Residual is what's left over after specific bequests. Specific asset (life insurance, RRSP) is tax-efficient. Charity bequest specialist or estate lawyer can advise on the best fit; many charities have planned giving offices to help.
What tax benefit do my heirs get?
The deceased's final tax return claims the donation credit. The credit can offset up to 100% of net income in the year of death and the immediately preceding tax year. For larger estates, this often eliminates most or all of the tax owing on capital gains realized at death (the deemed disposition). Effectively, every dollar to charity reduces the tax bill by 40-50 cents in most provinces.
How do I name a charity in my Will?
Use the charity's full legal name (not informal abbreviation) plus the CRA Business Number / Registration Number (BN). Example wording — 'I leave $10,000 to The Canadian Cancer Society (BN 118829803 RR0001) for its general purposes.' This prevents confusion if the charity rebrands, merges, or dissolves before your death.
What if the charity doesn't exist anymore when I die?
Include a gift-over clause that names what happens if the primary charity is no longer registered, has merged, or has dissolved. Common wording — 'If [Charity X] is no longer a registered Canadian charity at the date of my death, this gift shall instead be paid to [Charity Y].' Without a gift-over, the gift can fail and go to residue or intestacy.
Can I direct how the charity uses the gift?
Yes, but with caution. Restricted gifts (for example, 'for breast cancer research only') can fail if the charity no longer runs that program. Unrestricted gifts are most flexible for the charity. If restricting, build in flexibility — 'preferably for X, but at the charity's discretion if not feasible.' Discuss with the charity's planned giving office.
Should I tell the charity I'm including them?
For larger gifts, yes. The charity may want to acknowledge your intention (recognition programs), help with precise wording, and ensure the gift can be used as you intend. Smaller anonymous gifts (under a few thousand dollars) often don't need pre-notification. Many Canadian charities have specific planned giving departments.