Giving While Living: Why You Might Consider Gifting Gradually Before You Die

In my role, I've had the privilege of sitting down with many parents to talk about what they want their financial legacy to look like. The conversations are all different, but a few common threads come up again and again.

"I want everything to be equal."

"I want to pay the least amount of tax."

And sometimes, "I'm not sure I want everything given all at once."

Whatever the initial concerns, my view on the matter tends to be the same. There's never a better time than the present to have these family conversations.

Once our planning work is done, some of my clients go a step further and share the high-level findings with their children, giving them a general sense of how the estate will eventually be distributed. This can be especially helpful when one or more children are named as executors, since it removes surprises at the worst possible moment. Disclosing this information is entirely discretionary and it depends on a number of factors, and there are real pros and cons on both sides that we can talk through together. Nonetheless, it's these types of conversations that inspired my first blog post topic, which is to consider the idea of gifting in a gradual manner. I'll start with the disclaimer that gifting gradually during your lifetime is not the right fit for every family. For the reasons I'll outline below, though, I'd encourage you to read through and reach out if you feel inspired to explore it.

Why consider gifting now?

The traditional approach is simple, you work hard to build wealth, you plan to live on it in retirement, and you pass what's left to the next generation. There's nothing inherently wrong with this, but it does leave the timing entirely to chance

That timing question is the heart of Bill Perkins' book Die With Zero, and it's how I think about gifting. Perkins argues that money's value also depends on when you receive it. A $50,000 gift at age 40 can help with a down payment, help put kids through school, or reduce financial stress during the busiest years of life. A $50,000 gift at 60 is undoubtedly very appreciated but may not have been as critically needed. It's at this point where I like to emphasize that these conversations are simply to create a "win-win" feeling for both parent and child, and never to insinuate anyone is wrong. The goal here is clear, the parents get a simpler and potentially more tax-efficient estate, and the children receive money at a point in life when it may matter more. The point here is to be intentional, rather than letting your wealth pass by default after you're gone.

The benefits of gifting now vs. later

There's no gift tax in Canada. Unlike the U.S., Canada doesn't tax gifts. If you hand your adult child $50,000 in cash, neither of you pays a cent of tax on it and it doesn't show up on anyone's return.

The nuance is in where the cash comes from. Giving is free, but raising the cash may not be. If you sell an investment to fund the gift, you'll owe tax on whatever that investment gained while you held it (depending on the account type). You aren't taxed on the gift, but you are taxed on the sale that happened just before it.

The same applies if you hand over the investment itself rather than cash. Transferring shares or a property to your child is treated as a sale at fair market value, so the gain is taxed in your hands either way. It's worth working with an accountant to understand what a gift will actually cost you, and I'm happy to collaborate with them on your behalf.

Giving gradually can mean less tax overall. Here's what I mean by that: When the second spouse passes away, the Canada Revenue Agency treats your investment account as if it were all sold on that final day. Years of growth get taxed in one shot, typically in the same year your RRIF is being taxed too. Selling a little at a time while you're alive and gifting the proceeds spreads that out, and often means less tax in total. Everyone's situation is different, so this is a conversation worth having with your accountant.

To better illustrate, I'll put some numbers to it. Let say you have a $500,000 Non-Registered Account that you built up from $200,000, so there's $300,000 of growth sitting in it.

If you hold it until death, half of that growth ($150,000) will get added to your final tax return all at once (this is how capital gains are taxed in Canada). With a RRIF and other income throughout the year already on that return, you're likely in Ontario's top tax bracket by that point. That would mean the whole $150,000 is taxed at 53.5%, or roughly $80,000, and that's before the tax on the RRIF itself.

If you sell $50,000 a year for 10 years instead and gift the money as you go, each sale is small enough to stay in the lower brackets. For example sake, lets assume you're a retiree in the 25% range. That works out to around $3,750 a year, or about $38,000 over the decade.

It's the same account, but roughly $42,000 more stays with your family. And your kids have the money when they're in their 30s and 40s instead of waiting decades for it. Please note, these numbers are only for illustration purposes. What this looks like for you will depend on a variety of factors that are personal to your financial situation.

Finally, a word of balance. A gift is permanent. Only give from money you're confident you won't need for your own retirement, health care, or lifestyle. A good financial plan can show you exactly where that line is, and I'm happy to help here.

Part 3: A few simple ways to gift

Fund their TFSA. Once your child is 18, they can open a Tax-Free Savings Account. Gift them the cash to contribute (the annual limit is $7,000 for 2026, plus any unused room from past years) and the investments grow tax-free for life.

Fund their FHSA. If your adult child hasn't owned a home, they can contribute up to $8,000 a year (to a $40,000 lifetime maximum) to a First Home Savings Account. Your gift funds the contribution, they get a tax deduction, the money grows tax-free, and it comes out tax-free for a first home purchase.

Help with their RRSP. If your child has unused RRSP room, gifting them the cash to contribute gives them a tax deduction today and a head start on their own retirement.

Contribute to an RESP for your grandchildren. The government adds a 20% grant on the first $2,500 contributed each year per child, so your gift gets an instant boost toward their education.

Pay for big expenses directly. Covering tuition, childcare, a wedding, or part of a home down payment is simple, tax-free, and targeted to where the help is needed most.

Help pay down debt. Wiping out a high-interest loan or making a lump-sum mortgage payment can free up your child's cash flow for years to come.

Give experiences. A family trip, a course, or time together are gifts I would argue pay the biggest "memory dividends" of all.

In conclusion, gifting while you're alive isn't about giving everything away. It's about matching your money to the moments that matter, for your children and for you. If any of the threads at the top of this post sounded familiar, let's talk. We can start with a clear picture of what you need for your own future, have an open conversation about your family goals, and begin to plan ahead around what you want your legacy to look like.