Parents want to make sure their children are taken care of once they’re no longer around. Most Ontario residents leave their children an inheritance when working on their estate planning documents. However, lately there has been an upswing in the numbers of people — while still alive — who are giving their children at least part of their inheritance in what is known as a living inheritance.
Seeing the effects
When parents give their children part of their inheritance while still living, they are able to see how that money helps their children. Perhaps some will use it to pay off student loans or for a down payment on a home. Maybe they need the money to start their own business or to help raise a new family. Experts say the way to go about it is not to give too much all at once to make sure there is enough for the parents’ own retirement. These gifts should only be considered when the parents are in a strong financial position.
Having the money talk
Money can make some people a little unpredictable. When a parent is considering gifting a child with part of his or her inheritance, it’s imperative to have a discussion about the gift beforehand. A parent most likely wouldn’t want the money to be spent in a frivolous manner. If an adult child has serious issues in these areas, perhaps a living inheritance is not the best option.
In any case, a parent should obtain advice prior to gifting a child with part of an inheritance. Discussing the options with an Ontario estate planning lawyer may be the wisest thing to do before mentioning a living inheritance to a child. An experienced lawyer would also be able to answer any questions regarding the tax implications of gift giving.