Giving While Living: Tax-Smart Gifts to Children & Grandchildren

Many Canadians in their 70s and 80s find themselves in a strong financial position — with their debts paid off, retirement income steady, and a desire to start passing on some of what they’ve built.

Rather than waiting to give through their estate, many are now asking: Can I help my family today?

The answer is yes — and there are some smart, tax-efficient ways to do it.

At Quantum Planning Group, we believe that "giving while living" isn't just financially strategic — it's personally rewarding. Here’s how to approach it thoughtfully.

1. The Benefits of Giving Now

Giving during your lifetime has several distinct advantages:

• You get to see the impact your gift has on your loved ones.

• You can guide how it’s used — whether for education, a first home, or a business.

• You can help reduce the size of your estate, potentially minimizing probate and taxes at death.

Plus, it opens up conversations about values, responsibility, and legacy — something that can’t happen once you're gone.

2. Understand the Gifting Rules in Canada

Unlike some countries, Canada has no gift tax. You can give money or assets to your children or grandchildren without triggering a gift tax on their end.

However, some gifts can still have tax consequences for you:

• Giving away an asset (like shares or property) is considered a disposition for tax purposes — meaning you may have to pay capital gains tax on any increase in value.

• Gifting income-generating assets to minor children can result in attribution rules, where the income is still taxed in your hands.

That’s why it’s important to gift cash or use structured tools that protect against unintended tax consequences.

3. Strategic Gifting with Life Insurance

Life insurance can be a powerful tool for multigenerational giving. Here are a few ways we help clients use it:

a. Funding Policies for Grandchildren or Children
You can purchase a permanent life insurance policy on a child or grandchild’s life and fund it while you're alive. This can create:

• A tax-free growing asset for their future

• A legacy that lasts long after you’re gone

Some clients treat this as a “family bank,” setting up policies that grandchildren can eventually use to fund education, buy a home, or launch a business.

b. Transferring a Paid-Up Policy
If you already have a paid-up policy, you can transfer ownership to a child or grandchild. Depending on the policy, this may have minimal tax consequences — and gives them a lasting benefit.

c. Charitable Giving Through Insurance
If philanthropy is important to you, you can name a charity as the beneficiary of a life insurance policy — creating a significant future gift while receiving tax benefits today.

4. Helping with Education Costs

RESPs (Registered Education Savings Plans) are a great way to help with grandchildren’s post-secondary education — and they come with a government grant (CESG) that matches 20% of annual contributions up to $500/year.

If you want to contribute to an RESP, speak with the account holder (usually the parents) and coordinate the contribution to avoid exceeding annual limits.

Giving while living is about more than money — it’s about connection, wisdom, and meaning. It allows you to make a difference today, while also planning smartly for tomorrow.

Whether it’s setting up a life insurance strategy, gifting cash, or helping a grandchild start their education, we’re here to help you do it right — with clarity and care. If you’d like to explore ways to give while living, let’s talk about the options that make sense for your family.