All About Estates

Estate Planning – Can You Just Give Some of it Away?

A recent article in the press reminded me of a trend in estate planning which appears to be taking more favor in recent times. It is not very complicated, can lead to considerable tax savings and other benefits while you are with the living. I am referring to the gifting of cash or assets during your lifetime.

Many people who consult me and other members of my practice are often surprised to learn that there is no gift tax in Canada. So cash given to your heirs, say children or grandchildren while you are alive is not generally subject to tax to either party.

After some careful evaluation of their potential estate, several of my clients have found themselves in the enviable position of having cash and assets they will not need in their lifetime. I understand by the way this has been recently termed as “never money”. If they hung on to these assets, it is likely costing them higher taxes annually, and these “never money” assets will likely cost the estate more fees (probate being a big one) and taxes, when they pass.

So many have decided to give these assets away to their heirs while they are alive. The heirs have used the funds in a manner that will likely cost less tax: For example pay down some personal debt, apply it as a deposit on a house, or turn around and invest in non-registered or registered investments.

The other benefit is these clients get to watch their heirs enjoy the gift and/or have some say on they will use it. At least they got to monitor what their heirs were doing with it. I have a client who decided to do this sometime ago, with advice from professionals and told me recently with tongue in cheek that she finds herself getting invited to family dinners on a more regular basis that in the past.

Gifting in this fashion has several benefits but must be done so in a careful manner. I would strongly urge you to see professional advice before doing so but I think you will find it is some to some of the easiest estate planning you can do, if you can do it.

Happy Canada Day and happy reading.

About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.

1 Comment

  1. Larry D. Amstutz

    July 4, 2017 - 2:54 pm

    Great advice… as a parent (and recent retiree) I believe it is better to help my adult children now financially if possible rather, than waiting 2-3 decades if I enjoy favourable health. This could be the difference for them in their ability to buy a home for instance.

    With this financial support however; it is imperative that proper advice and planning is combined with the gift. Money may be used for “paying down debt”… however, remember I worked hard my whole lifetime to acquire and built those assets, I am now sharing with my children. It would be wasted money to help them pay down debt… only to see them acquire more debt later on. Financial planning should be included in the conversation.

    Your family are not the only ones who would appreciate your financial support from this “never money”. There are many worthwhile charitable causes that would benefit from your generosity as well. By including philanthropy into your planning; it also encourages your family to think about their own planning and generosity in the future.

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