Posted on Wednesday January 26, 2022

Family wealth: How to support your children and grandchildren during your lifetime

When it comes to the personal, family and financial future of your children and grandchildren, why wait to let them benefit from the wealth you have largely built for them? Here are four ways to support your heirs during your lifetime... because the future is now!

Gifts to children: Daily support and wealth development

They have grown up so fast! It seems like just yesterday you were teaching them to tie their shoes, and today they are running the great marathon of life on their own. Your children, now adults, still need your support at a time in their lives when they are more active than ever. Either by gifting money or encouraging savings, you can give them the means to reach their full potential.

Outright cash gifts: Being there for your children when it counts

Once a parent, always a parent! Even if they know that when we leave, they will receive a generous inheritance, it’s during their working life, full of pitfalls but also of great opportunities, that our children need our support the most. The gift of money, which is tax- free for both the giver and the receiver, allows us to have a front-row seat to the real impact of our help and to set guidelines to ensure that it is used wisely.

Sell to bequeath funds, not responsibilities

Don't feel your children are capable or interested in managing some of your important assets? Whether it's a company or real estate that you own, it's important to consider how to pass on your assets while you are still in charge. For example, it may be wise to dispose of an apartment building or one of the family residences and make a cash gift to them. Keep in mind, however, that if there is a capital gain, you will have to pay taxes, unless it’s your principal residence.

Investment support: Help their family wealth flourish

To help them build their own financial wealth, you can help them make major investments that will shape their future. By serving as a springboard today, you give them the chance to see their assets grow over the long term.

Assistance in purchasing a property to kick-start their financial life

The purchase of a first home is a big moment and very often the biggest investment of your life. To help your child get into home ownership without losing their shirt, you can contribute to the down payment. The monthly mortgage payment will be lower and the cost of insuring the mortgage may be avoided.

Mutual funds: A solid foundation for their financial lives

By encouraging your children to invest in mutual funds, you are not only giving them the means to grow their assets, but also valuable tools for managing their wealth. By providing them with money to invest in mutual funds, they also benefit from the support of a banking institution and professionals who work with them to build a rich and solid estate. They will accumulate more wealth, be better protected and better prepared for retirement.

Gifts to grandchildren: Education and financial literacy

The future belongs to them. When we look into our grandchildren's eyes, all dreams are possible. Sharing the family legacy and a meaningful inheritance is not only about leaving a financial legacy, but also about passing on important values and knowledge that will follow them throughout their lives.

Supporting post-secondary education through RESPs

According to the Université de Moncton, in 2021, a Canadian student will have to pay nearly $8,500 per year for full-time studies there. If you count the money needed to buy school supplies, pay rent and all other personal expenses, the figures for a young adult can be staggering.

When you contribute to your grandchildren's RESP as early as possible, you accumulate capital easily and also benefit from substantial government grants to grow your savings tax- free.

Developing good financial habits with the School Caisse

Aside from the friendly teachings of Scrooge McDuck and Robin Hood, good money habits can be learned. For the FCNB (Financial and Consumer Services Commission), the basics of financial management are as important as learning to read, write or do math.

This knowledge is worth its weight in gold and can be passed on through the School Caisse. This account allows you to help your grandchild develop savings habits, since they are responsible for them.

Supporting your children and grandchildren financially while you are still with them is a wonderful way to give them the benefit of your experience, your keen judgment and your wisdom. There is no greater gift than knowing that they are safe and secure, while you are there to see them grow.

*Mutual funds are offered through Credential Asset Management Inc.  Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc.  Credential Securities is a registered mark owned by Aviso Wealth Inc.