May 13, 2026 | Planning Matters | 7 min read
Giving with Purpose: Should You Give to Your Children Now or Later?
Deciding when to pass on wealth is one of the most important and nuanced questions families face. In cities like Vancouver and Toronto, many young families are finding it increasingly difficult to save for a home or keep up with rising living costs. As a result, parents and grandparents are stepping in more often, while also needing to ensure their own long-term financial security is still intact.
There is no universal answer. The right approach depends on your financial situation, your family dynamics, and what you ultimately want your wealth to accomplish. In this edition of Planning Matters, we explore the key considerations to help guide that decision.
The Case for Giving During Your Lifetime
One of the most meaningful benefits of giving during your lifetime is the ability to see the impact firsthand. Whether it is helping fund a family vacation to create lasting memories, supporting your grandchildren’s education, or assisting with a home purchase, these moments can be deeply rewarding. In the case of helping your children buy a home in the same city so you can stay close to both them and your grandchildren, all three generations benefit.
Beyond financial impact, many families find that giving during their lifetime can also strengthen relationships and create a sense of shared purpose. As Nancy Fong, Estate Planner of NYF Wealth Management, often sees, the most important legacy is not financial security, but harmony and family connection. “Having clear conversations about gifting that is transparent to all the family members is the key to this harmony. Unmet expectations are what destroy harmony,” Nancy says. “Those little voices that whisper ‘is that fair?’ will be silenced if gifts are made with clarity and generosity.”
There are also practical advantages. Gifting during your lifetime may reduce the size of your estate, which can help lower future taxes.
With that said, Canadians are living longer than ever. A longer retirement means your generosity today must be weighed carefully against your financial security tomorrow. At Leith Wheeler, we can help you model different scenarios to discover whether a gift fits comfortably within your long-term plan.
Understanding the Tax Rules
Canada does not impose a gift tax, making cash gifts to the next generation fairly straightforward. The tax picture becomes more nuanced, however, when funding a gift with investments or transferring assets directly.
If you sell non-registered investments to fund a gift, any realized capital gains may be taxable, with 50% of the gain included in your income. Similarly, when transferring assets such as stocks or real estate, CRA treats it as a deemed disposition at fair market value, meaning any accrued gains can trigger tax even if no cash is received.
If you gift the asset to your child and they are still a minor in your province or territory (see chart below), certain income may still be attributed back to you:
It is also important to recognize that taxes are not avoided by waiting. Upon death, most assets are deemed to be disposed of at fair market value, potentially creating a significant tax liability on the final tax return. However, transfers to a spouse or common-law partner can typically defer those taxes until the surviving spouse’s death.
If you are drawing from retirement accounts such as a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) to fund a gift, any withdrawals will be fully taxable as income. Upon death, the full fair market value of these accounts is included as income on the deceased’s final return, unless the assets can be transferred to a qualifying spouse or dependent on a tax-deferred basis. In contrast, Tax-Free Savings Accounts (TFSAs) allow for tax-free withdrawals during your lifetime, and TFSA assets can generally pass to beneficiaries tax-free upon death.
The decision is not about avoiding tax entirely, but rather timing when and how the tax is payable.
Protecting the Gift
Legal Considerations
If your child is in a relationship, or may be in the future, it is worth considering how a gift could be treated if that relationship ends. While rules vary by province, a properly drafted domestic agreement, such as a prenuptial or cohabitation agreement, can help protect certain assets from division upon separation and preserve your intentions for the gift.
Structuring the Gift
For families seeking more control, there are a couple of common approaches:
- Inter vivos trust (a trust created during your lifetime)
Setting up a trust can allow you, or someone of your choosing, to retain oversight of how the funds are used. It can also help avoid probate.
However, trusts come with added complexity, costs, and ongoing administration, including annual tax filings.
- Loan instead of a gift
Another approach is to structure the support as a loan. This can provide protection in the event of a relationship breakdown or creditor claim, but it must be clearly documented through a promissory note or loan agreement. Courts will look at factors like written documentation, repayment terms, and whether payments have been made when deciding if it is truly a loan.
It is also important to address the loan in your estate plan, as it may need to be repaid to your estate unless your Will states otherwise. Any outstanding loan may also be subject to probate fees.
Family Dynamics and Communication
Beyond tax and legal considerations, family dynamics often play an even more important role.
Some parents worry that discussing inheritance too openly may reduce motivation or create tension, especially if distributions are not equal. Andrew Hoffman, Portfolio Manager at Leith Wheeler, offers a candid perspective. “Humans are meant to struggle, to be motivated, to create,” he says. “What I have witnessed, in my career, is giving too much without purpose and dialogue can extinguish this human trait.”
At the same time, conversations around money can be sensitive, especially when they involve topics like prenuptial agreements or structuring support as a loan. As Steve Ivacko of MNP Family Office notes, “Another factor that can impact a conversation around money is whether there are any feelings of entitlement. If you’re planning on leaving some (or a significant portion) to charity, it can be helpful to explain the reasoning. Whether it reflects a personal passion or a tax planning strategy, clearly communicating your intentions helps avoid misunderstandings. After all, when the time comes that there are questions and you’re not around to answer them, imaginations and assumptions can go in unintended (and often negative) directions.”
Approaching these discussions with transparency and clarity can go a long way in aligning expectations and preserving family harmony. For practical guidance, see our blog post, Conversations for Generational Wealth Transfer.
Using Your Children's Accounts to Give
There are also tax-efficient ways to support your children using their own registered accounts:
- First Home Savings Account (FHSA). The FHSA allows first-time home buyers to save up to $40,000 tax-free. It combines the best features of a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA): contributions are tax-deductible, and withdrawals for a qualifying home purchase are completely tax-free. Parents can gift funds to help their child contribute, and the child can choose when to claim the tax deduction to maximize its value. If a home is not purchased within 15 years, the funds can be transferred to an RRSP without impacting contribution room.
- Registered Retirement Savings Plan (RRSP). If your child has room in their RRSP, gifting funds to contribute can provide a tax deduction and allow them to withdraw up to $60,000 under the Home Buyers’ Plan (HBP) without immediate tax. The FHSA and HBP can be used together, potentially providing over $100,000 toward a home purchase.
- Registered Education Savings Plan (RESP). The RESP is a tax-efficient way to fund a child’s post-secondary education while benefiting from government grants and tax-deferred growth. Although contributions are not tax-deductible, the Canada Education Savings Grant (CESG) matches 20% of annual contributions up to $2,500 per child, providing up to $500 per year and a lifetime maximum of $7,200. Anyone can contribute, including parents and grandparents, and Family RESPs provide flexibility for families with multiple children.
- Tax-Free Savings Account (TFSA). If your child doesn’t qualify as a first-time buyer, the TFSA remains a flexible option. While contributions are not deductible, growth is tax-free, and funds can be withdrawn at any time for any purpose without tax implications. Any amounts withdrawn are added back to contribution room on January 1 of the following calendar year, allowing the funds to be recontributed in the future. Your child’s TFSA contribution room starts accumulating in the year they turn 18.
Finding the Right Balance
There is no one-size-fits-all answer to giving now versus later. In many cases, the most effective approach is a combination of both, providing support when it is most meaningful while preserving long-term flexibility.
What matters most is being intentional. By understanding the tax implications, structuring gifts appropriately, and having open conversations with your family, you can ensure your wealth is transferred in a way that reflects your values.
Before making any decisions, it’s important to work with qualified tax and legal advisors to ensure your strategy fits within your broader financial plan and supports your long-term goals.
