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.
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 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.
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