How to Give to Beneficiaries Today

If you have determined through a properly completed financial plan that you have more than your need for retirement you are in a strong position. Not only do you have the peace of mind that you are on track but you may also be in a position to help family and or charities you care about. In many cases this involves helping when you pass away but if your plan surplus is large enough you can get a head start today.

 Here are some key tips in exploring these options.

1. Why gift today? - Let’s start by asking why we would start this gifting process early. In many cases beneficiaries such as your children need the money more in their younger years rather than down the road. In giving some of your wealth away early you can help them in these key years while watching them enjoy the money while you are alive. 
   
   
2. Income Over Lump Sum- Giving annual payments as opposed to a large lump sum is a preferred way to gift for a few reasons. For one, giving a lump sum is a permanent loss of a large amount of money. This can be unsettling if you feel you may need some of these funds down the road. Secondly, your investments might provide the bulk of the income required through dividends and interest which avoids the scenario of killing the golden goose. Lastly, giving annually also reduces the risk of beneficiaries misusing the funds all at once or potentially losing a large amount due to bankruptcy or divorce (more on that later).
   
   
3. Tax Implications- There are no tax implications for receiving this money as an adult, however you may incur tax on accessing the funds to gift. For example, you might be withdrawing from taxable RRIF’s or non-registered assets that trigger taxation. Managing this is important and this is another reason annual income payments work well as it avoids a large withdrawal in one year.
   
   
4. Being Measurable Can Make Things Equitable- I have seen many times where parents start helping their adult children out, but it is all over the map. One kid needed help with the mortgage while another did not, which can lead to hurt feelings about unequal giving. If desired, you can gift annually and be equal to each beneficiary. Instead of gifting solely on need, each beneficiary can receive an amount and use it as per their wishes. This could be for mortgage payments, investing or just lifestyle. 
   
   
5. Family Meeting- Having a meeting with your beneficiaries can be great way to clear the air on your wishes. You can also learn what your beneficiaries may or may not want as part of this. This can help address any issues and avoid bad feelings in the family.
   
   
6. Separation- As with inheritances if you keep these funds in a sperate individual account they are not subject to marital division. 
   
   
7. Charitable Giving- Charitable donations can generate large tax credits to reduce tax every year. In the case of non-registered investments, you can also get the added benefit of gifting investments directly. When this happens any capital gains triggered are wiped out when given to charities. There are also opportunities to set up sub foundations for annual school scholarships or other causes. Here you can use dividends and interests earned to gift annually with many schools or existing foundations assisting in the set up.