Q&A: Give funds to son?
Question: I am 80 years old, in good health, live in B.C. and like to travel. I own my own condo worth an estimated $330,000. I have $355,000 in RRIFs and a non-RRIF portfolio of $500,000. I have good pension income.
My question is this: since I take no income from my non-registered portfolio, mostly mutual funds of the conservative type, would it make sense to transfer half of these funds now to my son, who is my only heir? I know I would have to pay taxes on the capital gains. Would it be better for him to put as much as he is allowed in his RRSP? I rather think he would be better off not doing this as I’m heavily taxed on the amount I must withdraw from my RRIF and he might be in the same situation some day. — E.B.
Gordon Pape’s answer: My inclination is to give the funds to your son now. The capital gains are going to be taxed at some point, either while you are alive or after you die as part of your estate. So that should not be a prime concern.
The easiest way to do this would be to sell the units to trigger the capital gains liability, assuming you will not incur any hefty deferred sales charges. Then give cash to your son which hcan contribute to the RRSP. At that point he can reinvest in the same mutual funds or some others, if they are a better fit.
This will give your son more years of tax-sheltered compounding within the RRSP which can add up to a lot of money over time. As for your worry that he may have to pay higher taxes when the time comes for him to retire, forget it. If his taxes are high, it will mean he and his family will have a good income and can live comfortably. That’s what really matters.
Do you have a money question you’d like to ask Gordon Pape? E-mail it to
and then check our website every week to see if it was chosen for a response. Sorry, we
cannot send personal answers.