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Make a lasting gift to your grandkids

As a token of love, it's easy to give your grandchildren periodic handouts that are soon spent and forgotten. But what if you'd rather make a meaningful difference in their lives? The good news is that you have a number of options to provide an enduring gift.

Before you give away money, however, it's crucial that you ensure you have enough to last your lifetime. Our team can help you crunch the numbers. Once that's done, the main gifting considerations are the age of your grandchildren and amount of control you want over the funds.

Young grandchildren
For children under age 18, consider contributing to a Registered Education Savings Plan (RESP). See next article to learn more about the benefits. But the great thing for grandparents is that you can set up a single family plan for all your blood grandchildren (even the unborn!). In addition to simplifying your gifting, a family plan allows funds to be allocated among those who pursue post-secondary education. An in-trust account (ITA) is another option, which, unlike RESPs, has no restrictions on how the money is used. The drawback of an ITA is that the child could legally gain control of the money upon reaching adulthood - a scary thought for many grandparents.

Adult grandchildren
For adult grandchildren, consider gifting money for a business or new home. Note that without good planning, the funds could be exposed to a business or marriage failure. Gifting funds for a Tax-Free Savings Account or an RRSP enables the children to earn tax-free or tax-deferred income. Again, though, the child could withdraw funds and spend them frivolously.

Retaining control
If control is an objective, you could extend a "demand" loan to a grandchild for business or a home, which would protect the funds against creditors. If you have a substantial amount to gift, a formal trust set up during your lifetime lets you control how the money is distributed. A testamentary trust set up in your will offers considerable tax advantages that could be "sprinkled" among all beneficiaries - your grandchildren and your children.

These are only some of your options in making a lasting gift to your grandkids. It's a complex decision that our team can assist you with, ideally with the involvement of your own children. Give us a call.


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