Giving a Living Inheritance
How to Support Loved Ones During Your Lifetime—Without Compromising Your Financial Future
A “living inheritance” refers to the act of giving financial gifts to your loved ones while you’re still alive, rather than waiting until your estate is settled. Whether you want to help a child buy a first home, contribute to a grandchild’s education, or support family during a time of need, a living inheritance can offer immediate impact—and peace of mind.
But without careful planning, these gifts could unintentionally affect your own financial stability, retirement goals, or tax situation. That’s where a financial planner can help.
Why Consider a Living Inheritance?
Giving during your lifetime allows you to:
- See the impact of your gift while you’re alive
- Support family when they need it most—like during early adulthood, homeownership, or raising children
- Reduce the size of your estate, potentially minimizing probate or tax implications
- Avoid uncertainty or conflict over your intentions after your passing
In Canada, living inheritances are becoming more common as parents and grandparents seek to help the next generation navigate rising costs of living, housing, and education.
Common Uses of Living Inheritance
A living inheritance doesn’t have to be a large one-time transfer. It can take many forms, including:
- A lump sum toward a down payment on a home
- Monthly contributions to assist with living expenses
- Funding RESP or TFSA accounts for children or grandchildren
- Helping pay off student loans
- Providing seed capital for a small business
- Supporting long-term care or health needs of a family member
Each situation is unique—and should align with your broader financial plan.
Tax Considerations in Canada
In Canada, there is no gift tax, and recipients of a living inheritance generally do not pay tax on the amount received. However:
- Any capital gains from the sale of gifted assets may trigger taxes for the giver
- Gifts involving investment accounts or property may have more complex tax implications
- Contributions to certain accounts (like RESPs or RRSPs) may have annual limits or require coordination
A financial planner will help structure your gifts in a way that is both tax-efficient and aligned with your financial capacity.
How a Financial Planner Can Help
Giving is generous—but it must be sustainable. A financial planner can:
- Model future cash flow to ensure gifts won’t compromise your retirement
- Identify tax-efficient strategies for giving assets, cash, or investments
- Create a schedule or structure for gradual gifting (e.g., annual amounts vs. lump sum)
- Help communicate your intentions to family members to avoid future misunderstandings
- Integrate the gift into your broader estate plan
With the right advice, you can strike a balance between generosity and long-term security.
Protecting Family Harmony
Even well-intentioned gifts can cause tension if one family member receives more than another, or if expectations are unclear. A planner can help you:
- Establish fair and transparent terms
- Document your intentions formally
- Decide whether to gift equally or according to need
- Consider alternate arrangements such as loans or trusts
Involving an impartial advisor often helps navigate emotional dynamics and reduce future conflict.
FAQs: Living Inheritance in Canada
Is there a gift tax in Canada?
No, Canada does not have a gift tax. However, some gifts may trigger capital gains or other tax consequences for the giver. A planner can help avoid surprises.
Can I give money to my children without affecting my OAS?
Yes, in most cases. But large capital gains from asset sales may affect your net income, which in turn could impact Old Age Security (OAS) clawbacks.
Should I give a lump sum or smaller ongoing gifts?
It depends on your financial situation and the recipient’s needs. A financial planner can help structure a giving plan that’s sustainable and tax-smart.
How much can I give without triggering a tax issue?
There’s no official limit in Canada, but gifting appreciated assets or income-generating investments can have tax implications. Professional advice is recommended.
What if I want the money used in a specific way?
You can set conditions through legal tools like trusts or written agreements. A planner can coordinate with your lawyer to make sure your wishes are upheld.
Where to Start
Giving a living inheritance can be one of the most meaningful financial decisions you’ll ever make. With the right guidance, you can support your loved ones without sacrificing your own future. Whether you’re considering a one-time gift or a structured giving plan, working with a financial planner ensures your generosity is well-planned and impactful.
If you’re based in London, Ontario, MacLean Investment Group can help you develop a custom strategy for giving—one that aligns with your goals, values, and financial future.
