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 answers: 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.
Thegive cash to your son which he can contribute to the RRSP. At that point
he can reinvest in the same mutual funds or some others, if they are a better

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.

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