Estate management isn’t just about what happens after you’re gone— it’s also about what you can do now to help manage future estate taxes, transfer wealth strategically, and attempt to create a meaningful impact during your lifetime.
For coordinated guidance across both sides of the border, explore our cross-border financial planning service.
Many families recognize that intentional lifetime gifting isn’t simply generous; it may also be a smart approach to transferring your assets. If you’re in a position to support your own retirement needs, lifetime gifting can be a way to manage future taxes while helping your loved ones during your lifetime, when support may be most useful. And unlike traditional inheritance, you’re able to experience the impact of your generosity.
After working with clients on their gifting and estate strategies over the years, we’ve pulled together some insights we hope you find helpful.
The “Great Wealth Transfer” (U.S.)
The topic of gifting assets is timely because America is undergoing the greatest wealth transfer in history.
According to Cerulli Associates, a wealth management research firm, $124 trillion of wealth will transfer among generations through 2048. Cerulli projects that of the total, $105 trillion is expected to flow to heirs and $18 trillion to charities. The bulk (81%) will be transferred primarily from Baby Boomers (born between 1946 and 1964).
Millennials (born between 1981 and 1996) will be inheriting the most of any generation over the next 25 years ($46 trillion). However, Gen X (born between 1965 and 1980) will inherit the greatest portion of assets in the next 10 years, totalling $14 trillion.
So, determining how to transfer these assets may be a discussion you want to start having now.
Shift in Gifting Philosophy (U.S.)
Legacy gifting after death has long been the most popular way households have distributed their wealth. Today, however, a growing number are opting for lifetime or intentional gifting — passing along money in a deliberate way while still alive.
The rise in intentional gifting may be attributed to several factors, including a desire to help family during one’s lifetime, a greater understanding of taxation and lifetime gifting limits, and the prevalence of gifting choices.
Benefits of Lifetime Giving (U.S.)
- Manage the size of your taxable estate: For 2025, the IRS allows individuals to gift up to $19,000 ($38,000 for married couples) per year without being a taxable event for the recipient. There is no limit on the number of individuals you can gift. For example, a married couple with two children and five grandchildren can transfer up to $266,000 annually.
- Lifetime exemption: The IRS allows individuals to gift up to $13.99 million ($27.98 million for married couples) to their heirs under the lifetime gift and federal estate tax exclusion.
- State-level considerations: Some states, such as Massachusetts, Oregon, and New York, levy their own estate taxes. For some families, state-level taxes can take a bite out of the inheritance left to loved ones.
- Charitable giving: Donating to charity while living can offer immediate satisfaction and tax benefits. Donor-advised funds allow for irrevocable contributions and flexible grant-making over time.
- 529 plans: These education savings vehicles allow family members to make significant contributions, including super-funding options up to five years of annual gift exclusions.
Canadian Considerations: Lifetime Gifting in Canada
While the U.S. has specific gift tax rules and exemptions, Canada does not levy a gift tax. However, that doesn’t mean gifting is tax-free in all situations. Canadian families exploring lifetime gifting should keep the following in mind:
No gift tax, but capital gains may apply
Canada does not charge tax on cash gifts between individuals. But when you gift certain assets—such as stocks, real estate (except your primary residence), or business holdings—the Canada Revenue Agency (CRA) treats this as a deemed disposition. You may owe capital gains tax on the difference between the asset’s original cost and its fair market value at the time of transfer.
Probate planning advantages
Lifetime gifting can help reduce the value of your estate subject to probate fees, which vary by province. For example, Ontario’s probate fees are approximately 1.5% of the value of the estate. By gifting while alive, you may be able to reduce the probate burden on your heirs.
Attribution rules
If you gift income-generating assets to a spouse or minor child, the income or capital gains may still be attributed back to you and taxed in your hands. Attribution rules are complex and often misunderstood, so planning with a qualified advisor is recommended.
Using Canadian financial tools
In Canada, families may use structures such as:
- Trusts: Inter vivos trusts can hold assets outside of the estate, though they have their own tax considerations.
- RESPs: A popular vehicle for education gifting, with government matching grants.
- FHSAs: For helping adult children purchase their first home.
- Donor-Advised Funds (DAFs): Similar to the U.S., these allow for charitable giving with immediate tax benefits and long-term donation flexibility.
Principal residence exemption
If you gift your primary home to a child, no capital gains are triggered thanks to the principal residence exemption. However, gifting a cottage, rental property, or investment real estate will likely result in a taxable gain.
Clear communication matters
Just as with U.S. families, Canadian parents or grandparents may choose to give unequally or early. Having conversations with loved ones in advance may help reduce misunderstandings or future conflicts about fairness, intent, and expectations.
Conclusion
Gifting during your lifetime isn’t just about generosity—it’s a proactive estate management strategy. It might be able to help you manage your estate tax liability, align with your legacy intentions, and create opportunities to share your values and support when your loved ones may benefit most.
Whether you’re helping a child buy a first home, funding a grandchild’s education, or supporting a cause you care deeply about, early gifting allows you to be present for the impact. It also gives you greater control over how and when wealth is transferred and used.
As financial professionals, we can help you and your family decide if this strategy is a fit for your situation. We can help you tailor a gifting strategy by assessing your needs and goals, considering the timing and amounts of any gifts, and monitoring for any needed adjustments.
Please don’t hesitate to give us a call to start the conversation.
Sources:
1. Cerulli Associates, December 5, 2024
2. MassMutual, March 18, 2024
3. Fidelity, January 01, 2025
4. Merril Lynch, May 2025
5. The College Investor, April 4, 2025
6. Saving For College, December 30, 2024
0 Comments