Should You Give Your Kids Money Now Instead of in Your Will?

Be generous with adult-aged kids but only if…

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One of the questions I’m asked most often now is: “Should we give adult-aged kids/grandkids money if we can afford to, as opposed to them getting it when we die?” In fact, just the other day I said, “For sure!” to my dad when he asked. Kidding, look, I can’t cover off every angle on this in a short video — we’ll look at this subject again in an upcoming podcast on estate planning. But there are two key points I want to make here: 1) Be a bit careful. I think some people are giving money, quite a bit of money in many cases, when I’m not sure they can truly afford it. When I think they’re putting their own retirement finances in jeopardy.

People often are living to be quite old now. My dad is like 132 or something. As mentioned in a previous video, elder-care costs are rising at a greater-than-inflation-rate pace. Speaking of inflation… what if it picks up. Or investment returns disappoint relative to forecasts. I’m not trying to scare you here, but make sure you have a true cushion.

I would love to hear from some financial advisors in the comment section about whether or not they’re seeing some clients want to push the envelope here. Okay, 2) If you can truly afford it, I almost always think it’s a great idea. Why? The adult-age kids/grandkids can often use the money a lot more now than later.

They have young children, the current high cost of living, expensive houses, etc. Also, there are opportunities they can take advantage of that you probably can’t. Good opportunities. Boosting after-tax returns. FHSAs — doesn’t get any better. TFSAs, RRSPs, paying off non-deductible debts. You’re past all that. Plus, and this is key, you’re alive to see the benefits the money brings, including the stress reduction the financial help can create in your loved ones’ lives.

And no, there isn’t a gift tax in Canada. And you could save some money on probate fees! Why do I have the feeling many viewers are only going to share point 2 of this video with their parents and grandparents.