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Why Many Parents are Gifting Part of Their Estate While They’re Alive?

There is an old saying that it is better to give with a warm hand than a cold one. Put another way, for many parents there are benefits to gifting money to the next generation. A recent CIBC poll confirms more than half of Canadian parents have either given or plan to give a significant gift or early inheritance to their children. The main reason for giving money while alive is “getting to see how the money is making their loved one’s life a little easier”.

Money has been defined as a “magnifier”; many parents feel that giving money too easily can disincentivize a young adult. Parents are also concerned about money enabling bad habits or getting into the hands of an exploitative partner. Research shows that the most popular gift is that of help with a first home. With this minefield of risks, opportunities and challenges around gifting, research suggests the need for a financial planner and lawyer to work closely with a family to provide strategies on how best to do it. There are financial benefits of cash gifts being given while alive, among them being the reduction of taxes and Probate fees. Also, in Canada, there are no gift taxes at this time.

There are lots of problems that a gift of money can solve, but it can also ease burdens, giving opportunities for experiences that might not otherwise be possible. We recommend gifting but always with caution and a clear understanding of the implications.


Read about Beneficiary Designations

Court Case on whether the presumption of resulting trust should be imposed in the case of a beneficiary designation.

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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.