Gift Now or Inheritance Later?
One of my favourite conversations to have with clients has to do with estate planning. I know it sounds morbid but that’s not what I’m talking about.
If you know you have enough money to live out the rest of your days in comfort, the conversation turns to: What is going to be left for my children?
This discussion is very important from a planning point of view as it brings up some questions surrounding taxes as well as updating wills, powers of attorney, and mandates but this is still not what I’m talking about.
The question I like to ask is: Would you prefer to give them a little bit less today but get to watch them enjoy it, or try to maximize how much you leave them in the future?
It’s not an easy question to answer, mainly because there is no right answer. It comes down to personal preference. Some people will say they want their kids to “learn the hard way” or “make it on their own”. Some people feel they’ve given enough after paying for higher education. Both are completely fair points of view.
For others though, the idea had never crossed their mind and they just love it. I can afford to give money to my children or grandchildren now? How does that work?
In Canada, there is no tax implication when giving gifts. That’s not to say there can’t be tax implications depending on the source of the funds but for the most part it is tax-free. Whether it’s to help them with a down payment on their first home, pay for a much-needed vacation, or just give it to them and let them decide, the choice is yours.
If your kids are already living comfortably, you might just say “I’ll keep it for now and they’ll get more later”. However, if they are just getting themselves started and would really benefit from a little boost of cash, it can be life changing.
Which option is for you?