When it comes to passing down wealth, should you gift money to your kids now, or leave it for inheritance later? There’s no one-size-fits-all answer but understanding the pros and cons, and tax implications, can help you choose what’s best for your family.

No Gift Tax, but There Are Tax Triggers

The good news: Canada doesn’t have a gift tax, so you can give cash or personal items to your children without triggering taxes at both ends.But here’s the catch: if you gift capital property (like an investment, cottage, or shares), it’s treated as if you sold it at fair market value. That means the giver may owe capital gains tax on the appreciation. For example, if you’ve held a cottage for years and its value has risen, gifting it now could trigger a hefty tax bill, whereas passing it on later could delay that tax until your estate transfers ownership.

Gifting Cash Now: Simplicity and Family Benefit

Gifting cash has several advantages:

• No taxes for either side – simple and clean, especially if it's from non-registered sources like savings.
• Avoid probate fees – gifts given during your lifetime usually don't require probate, potentially saving your estate 1–1.5% in costs.
• Support when it's needed most – a gift today can help your child buy a home, start a business, or pay for education—making your generosity truly timely.

Just be mindful of attribution rules: income earned from gifts to minors may be attributed back to you and taxed in your hands, except for capital gains.

Why Leaving It as an Inheritance Might Be Easier

If your assets include complex or highly appreciated investments, or properties, inheritance sometimes offers smoother tax treatment:

• The deemed disposition rules make the estate responsible for capital gains, not the heirs—alleviating some burden during big life transitions.
• Major registered holdings (like RRSPs or RRIFs) are taxed only on the final tax return—then you pass on the remainder to your loved ones.
• Beneficiaries don’t pay tax on inherited assets—only on any income those assets generate later.

Family Dynamics and Planning

Beyond taxes, gifts can shape dynamics within families:

• Gifted assets may affect dependency and expectations, sometimes even impacting motivation or financial responsibility.
• Leaving inheritance later enables easier estate management; however, early gifting can reduce disputes by equalizing support ahead of time.
• For complex situations, tools like trusts or estate freezes help control timing, usage, and growth of transferred assets while providing peace of mind.

Which Option Fits Your Family Best?

Gifting now works well if you want to:

• Help your child or grandchild in real time,
• Avoid probate,
• Keep things simple with cash or personal items.

Leaving an inheritance makes more sense if you own high-growth assets, want tax deferral, or need control until later.

No matter what path you choose, clear communication is key. Talking openly about your intentions, family expectations, and financial plans can prevent misunderstandings—and ensure your legacy supports both values and well-being.