Earlier this year, Alma Ramos** received a gift of $600,000 from the estate of her eldest sister, Lenora.** Her immediate inclination was to donate it all to charity. “I wasn’t expecting that kind of gift from my sister,” says Alma. “At 75 years of age, I have everything I need to live the rest of my life in service, filled with grace and gratitude. Gifting the money to those in need feels like the right way to honour my sister and her incredible life”.
Alma has four siblings with whom she grew up in the central Philippines. Her father was an accountant and her mother a schoolteacher and guidance counsellor. From her parents, the Ramos children learned to love each other, the value of discipline, the importance of education and the need for hard work, honesty, and respect for others. Like many Filipino families they also enjoy a deep connection to their church and its community.
Lenora was the first in the family to leave the Philippines. She moved to Canada in 1967 to work as a chemical researcher at McGill University. She was part of the team that discovered and defined the world’s first cancer biomarker, which led to the development of the world’s first blood test to detect and monitor cancer cells.
This professional success contributed to Lenora obtaining her Canadian citizenship and beginning the process of arranging for her parents and siblings to immigrate to Canada. “Lenora changed the trajectory of all our lives,” says Alma. “Family is at the center of the Filipino culture, so coming to Canada together enabled our family to remain close while also providing each of us with opportunities to flourish”.
The timing of Alma’s inheritance coincided closely with her annual review with her BMO Private Wealth Investment Advisor. Alma’s Advisor asked her if she would be open to exploring an alternative donation strategy that would maximize the use of the charitable tax credits she would receive and create a legacy honouring her sister. Alma agreed to receive a proposal. Members of the BMO Private Wealth Philanthropic Advisory Services and Estate & Insurance Advisory teams worked together to find a winning solution. They proposed the following:
Purchase a Permanent Insurance policy for $600,000 to be paid up in 10 years.
Annual premium of $55,000 for the 10 years.
Make the owner and beneficiary of the policy a newly established Donor Advised Fund (“DAF”) via the BMO Charitable Giving Program, called the Alma and Lenora Ramos Gift Fund.
With the DAF being named the owner and beneficiary of the insurance policy, Alma will receive an annual charitable tax credit for $55,000 for the premiums she pays.
The premium payments can be made from the money she inherited or by using appreciated securities from her non-registered accounts.
The annual tax credit received will eliminate any taxes Alma owes based on the level of her annual retirement income.
Alma’s BMO Private Wealth Investment Advisor will continue to manage the $600,000 in a portfolio designed to generate modest income, providing additional financial resources in retirement. These monies can be used, if required, or donated to the DAF as part of her estate planning.
Upon Alma’s passing, the DAF will receive the death benefit from the insurance policy.
An opportunity for successors and/or charitable beneficiaries to carry on philanthropy in perpetuity is possible with disbursement instructions established for the Alma and Lenora Ramos Gift Fund.
“I never imagined something like this was possible,” shares Alma. “Lenora and I never married, and we never had children. When not working we spent hours volunteering together. To be able to create a DAF that incorporates our names to support our church and many of the charities near and dear to us both, in perpetuity, is heart warming”.
“Lenora used to say we owe so much of who we are to the people whose paths we have crossed in our lives,” shares Alma. “Knowing the gift my sister gave to me can keep giving gifts to others after I’m done travelling my path in life is a true blessing”.
**Names and some of the personal details of the client have been changed to protect their privacy.
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