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Scotiatrust®, The Bank of Nova Scotia Trust Company
There are many decisions you will have to make when drafting a Will. If they are not thoroughly considered, some of these decisions can have unintended consequences for your estate and loved ones.
Here are some of the key issues that should be discussed before drafting your Will:
Scotia Wealth Management
Giving money and gifts to grandchildren is something many grandparents look forward to and enjoy doing.
In most instances, the amount of money or the size of the gift is relatively modest and can be deposited into a savings or investment account with little or no fuss. But if the gift is more substantial or if it is to change hands long into the future, complexities can arise. The following provides you with a range of considerations to think about when transferring wealth to grandchildren.
The first factor to consider is when will the transfer take place – now, in the future, or both. If you want to gift cash or other property during your lifetime, keep the potential tax consequences in mind. If capital property (e.g., securities, a cottage) is gifted, you will have been deemed to have disposed of the asset at fair market value and must pay tax on any gain.
Also, consider income attribution rules. These rules state that income (not capital gains) on property transferred or loaned, directly or indirectly, to a related minor child (e.g., grandchildren, nieces and nephews) is attributed back to the transferor or lender. These rules can be punitive and often tilt the balance in favour of deferred giving.
For example, say you transfer $50,000 in cash and shares with a market value of $50,000 and an adjusted cost base of $30,000 to your grandchild on their 15th birthday. You would report a capital gain of $20,000 on the transfer of shares. The grandchild would report any future gain, but any dividend income from the shares and any income earned on the $50,000 would be attributed back to you. You must report the dividend and other income as long as the grandchild is under the age of 18 at the end of the year. Income attribution would not apply if the transfer was made to an adult grandchild.