Estate Planning Gifting Strategy

Written by Shannon Warawa, CPA, CA on Apr. 26, 2016

An estate planning gifting strategy is basically when you start to give away some of your assets prior to death in order to optimize taxes within the family.

Usually, an estate planning gifting strategy refers to how we will distribute our assets when we die.  But you might be overlooking significant tax savings by not considering giving away these assets while you’re still alive.

Examples of an Estate Planning Gifting Strategy

Gifting money to your children now could help them reduce the amount of non-deductible interest they pay.

For example, if you’re planning on leaving your adult children money and can afford to gift it to them now rather than after you’re gone, you should consider doing so.  Your children may have mortgages on their homes, or other debt. Gifting money to your children now could help them reduce the amount of non-deductible interest they pay.

Or, if your children have no debt and are in a lower tax bracket than you, the advantage of giving them investable assets while you’re still alive is the tax that would be saved when the income from these assets is taxed at your child’s lower tax rate rather than at your higher tax rate. In Alberta, this can be as much as 23%, so gifting $200,000 that’s earning 4% could save you $1,840 annually in taxes.

If you would like more information on Estate Planning Gifting Strategy or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Shannon Warawa of KWB Chartered Accountants for providing this content.

Shannon Warawa, CPA, CA

Shannon Warawa, CPA, CA

Accountant

Shannon Warawa joined KWB in September 2005. Shannon received her Bachelor of Commerce from the University of Alberta in 1999. After articling with PricewaterhouseCoopers for three years, she was employed with Howard Kirkpatrick Associates during which time she obtained her C.A. designation. She marked practice questions for the 2004 Uniform Evaluation. In 2017, her name was added to the coveted Bunnock trophy when her team took 1st place in KWB’s 10th Annual Bunnock Tournament.

Shannon works part-time, is married and has 3 children. Away from work, she enjoys camping trips with her family, reading, attending her children’s basketball, hockey and lacrosse games. She has also been the volunteer Treasurer on the Parent Council of her children’s elementary school for the last number of years.

Shannon's Contact Information

Other Posts by Shannon

Feb 19 2015
US Tax Filing

Are you a US citizen? Do you spend more than 120 days per year in the US? If so you may be required to file a US personal tax return.

Mar 21 2017
CRA Fraud Protection

Canada Revenue Agency and police again warned taxpayers of randomly targeted fraudulent telephone calls and e-mails that are being sent out as CRA fraud.  These phone calls and e-mails are not from the CRA. Annually the number of CRA fraud scams rise near the April 30th tax deadline. The phone call scams are imposters trying

Aug 11 2015
Applying for a trust account number or asking for a clearance certificate

Applying for a trust account number Trustees can apply for a trust account number before filing their T3RET, T3 Trust Income Tax and Information Return. Trust account numbers start with the letter “T” and are followed by an eight-digit number. You can use Form T3 APP, Application for Trust Account Number to apply for a

Aug 30 2016
Graduated Rate Estates – New Rules for 2016

Starting for 2016 taxation years, inter vivos trusts, trusts created by will and certain estates will be subject to the top taxation rate. There are two exceptions to this change: graduated rate estates and qualified disability trusts. Graduated tax rates will still apply to these types of estates and trusts. Income earned and retained in

Nov 15 2016
Top 4 Financial Tips for the New Parent

Here are our top 4 financial tips for the new parent: Apply for a Social Insurance Number (SIN) for your child: It’s a good idea for you to apply for a Social Insurance Number for your child as soon as they are born. This way, you will not be left scrambling to obtain one when your

Mar 28 2017
EI, OAS and CPP Rulings

Employment and Social Development Canada (“ESDC”) is responsible for EI, OAS and CPP rulings, not Canada Revenue Agency. On April 1, 2013, the Social Security Tribunal (“SST”), an independent administrative tribunal operating at arm’s length from ESDC, was introduced to review appeals on EI, OAS and CPP rulings made by the ESDC. The process to

Jul 11 2017
Direct Beneficiary Designation - RRSP or RRIF

If you are considering a direct beneficiary designation for either a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF), you should be aware of some negative consequences that can occur. A direct beneficiary designation can result in unintended tax consequences to the estate, the inequitable treatment of heirs or the distribution

Jan 16 2018
Advance Income Tax Rulings

Advance Income Tax Rulings are written statements providing assurance on the income tax treatment of a specific proposed transaction or transactions that you might be contemplating. Subject to any disclaimer or qualification stated in the ruling, the ruling is considered binding with respect to the specific taxpayer making the request and the specific proposed transaction

Aug 7 2018
Form T1135 Foreign Income

Form T1135 Foreign Income Verification Statement must be filed if you, your corporation, trust or partnership, owned or held foreign property with a cost amount of more than $100,000 at any time in the year even if some or all of the property was sold before the year of the year. The form is

Sep 11 2018
Receipt Bank

If you would like to spend less time on data entry and more time growing your business, you should automate your bookkeeping with Receipt Bank. Receipt Bank is a website application that extracts key information from your invoices and receipts and publishes it directly into Quickbooks Online (QBO). Integrates with QBO You can submit invoices