Don’t let tax efficiencies dictate the best ways to pass on wealth.
The idea that wealthy parents or grandparents leave money to their kids or grandkids in their will is becoming outdated.
So says Ethan Astaneh, wealth advisor and client relationship manager at Nicola Wealth in Vancouver. While money can definitely be passed down via wills and estates, families should consider other methods, such as monthly payments or annual cash lump sums, insurance policies and trusts.
These days, it’s about passing wealth on to younger members of the family while you’re still alive to see them enjoy the benefits, Astaneh says.
- Cash lump sums
One of the most popular forms of wealth transfer is gifts of cash, and often that means helping children purchase their first home. “The big one right now is assisting children with getting into the real estate market,” Astaneh says.
Other options include monthly, biannual or yearly lump sums. These gifts can help younger members of the family by providing a solid financial cushion but without giving enough money that they stop working. He says he’s seen sums ranging from $50,000 to $200,000 gifted annually.
The pros of giving cash, apart from the enjoyment of seeing your children use the money, is that you can give it without paying taxes. It also reduces the size of your estate upon death and the amount of tax that needs to be paid on it.
Author of the article: Renée Sylvestre-Williams • Canadian Family Offices
(Please find the following parts of the article in our next posts).
*The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this text accepts any contractual, tortious, or any other form of liability for its contents.
For any questions, give us a call.
