# Gifting money to a child



## Bruins63 (Jan 18, 2018)

Hi folks...my wife’s Mom is 85...my wife was the only child...I’m going to use some fake numbers here...if my wife’s mom had $50,000 cash in her chequing account, and wanted to pass it along to my wife, can the $$ simply be transferred from my wife’s mom’s account to my wife’s account with no tax implications? Are there any special forms that need to be filled out or can the $$ simply be transferred without an tax implications? Thanks


----------



## OnlyMyOpinion (Sep 1, 2013)

You are correct Bruins - a gift to an adult has no tax implications. Just note that her bank may ask about the transfer if she is elderly, and your wife's may ask about it's provenance. I regularly gift 6-figs by just going to my branch teller and explaining what I want to transfer (in this instance it is going to another TDCT acc).

If both happen to bank at the same branch, it may be worth going in together so she can explain what she wants to do and the bank can be assured there is no duress going on. It is after all, her money and she can do what she wants with it if her mental capacity is not in question.


----------



## james4beach (Nov 15, 2012)

What if a parent has securities (stocks in a brokerage) they want to gift to a child. Does the parent first have to sell the securities and trigger capital gains taxes on them, then gift the cash? Or is there some tax efficient way to do this?

Would be unfortunate to get hit with cap gains taxes just to gift the equities.


----------



## Bruins63 (Jan 18, 2018)

Thanks, in the case where my wife would have POA, she essentially could move the monies herself with her Mom’s knowledge...would this still fall under the “gift” classification?


----------



## Plugging Along (Jan 3, 2011)

james4beach said:


> What if a parent has securities (stocks in a brokerage) they want to gift to a child. Does the parent first have to sell the securities and trigger capital gains taxes on them, then gift the cash? Or is there some tax efficient way to do this?
> 
> Would be unfortunate to get hit with cap gains taxes just to gift the equities.


They are essential deemed sold for tax purposes. If the amount is large enough, there are ways to structure it through estate planning and formal trusts but there is a very high set up cost and administration cost. For anything dear a million, it wouldn’t really be worth it.


----------



## OnlyMyOpinion (Sep 1, 2013)

Bruins63 said:


> Thanks, in the case where my wife would have POA, she essentially could move the monies herself with her Mom’s knowledge...would this still fall under the “gift” classification?


I think you will find some challenges in this case. Is her mother still mentally competent? In other words, right now the POA is just in place to allow your wife to assist her Mom with financial tasks? If that is the case, as I suggested if the two go into the bank and MIL explains the gift she wants to make, the bank may be willing to proceed. But if your wife is POA and MIL is not competent then no, she cannot decide to gift her mother's money to herself. It has to be her (competent) mother instructing the bank to make this gifting.


----------



## Plugging Along (Jan 3, 2011)

Bruins63 said:


> Thanks, in the case where my wife would have POA, she essentially could move the monies herself with her Mom’s knowledge...would this still fall under the “gift” classification?


You do need to be careful her as POA there is a conflict of inters to gift herself the money. The bank can question it. Also if there are beneficiaries other than your wife then they can question it too, and she has to prove there was nothing funny going on. 

I am the POA for my mother, though my parents have told tomove the money in my account to manage. My siblings, the other beneficiaries totally trust what I do. Yet, I keep perfect records for transparency and never transfer money to myself even if I pay for her things personally,


----------



## humble_pie (Jun 7, 2009)

james4beach said:


> What if a parent has securities (stocks in a brokerage) they want to gift to a child. Does the parent first have to sell the securities and trigger capital gains taxes on them, then gift the cash? Or is there some tax efficient way to do this?
> 
> Would be unfortunate to get hit with cap gains taxes just to gift the equities.



Plugging is right. The parent will incur capital gains taxes as he or she disposes of the securities.


----------



## humble_pie (Jun 7, 2009)

Plugging Along said:


> You do need to be careful her as POA there is a conflict of inters to gift herself the money. The bank can question it. Also if there are beneficiaries other than your wife then they can question it too, and she has to prove there was nothing funny going on.
> 
> I am the POA for my mother, though my parents have told tomove the money in my account to manage. My siblings, the other beneficiaries totally trust what I do. Yet, I keep perfect records for transparency and never transfer money to myself even if I pay for her things personally,



Plugging you are so right. I did the same for our mother, kept immaculate separate records about everything & quite often ran up expenses myself for various errands & purchases that i'd never reimburse.

the sibs never asked about the records, never even seemed interested. They seemed to trust me totally. Periodically i would offer to show or send them documentation, but they would always decline because they were too busy, they said, & anyhow they were sure i had everything in good order.

when ventually the will was opened & they learned about their inheritances, they were not only flabbergasted but they even seemed grateful.

what mattered to me was doing the right thing for a frail & ailing elderly person. Even if there had been no siblings, i would have done the same.

don't you find, Plugging, that when looking after $$ for another person, one becomes far more careful & far more conservative than one would ever be with one's own personal accounts.

.


----------



## OnlyMyOpinion (Sep 1, 2013)

Bruins, make sure your wife is aware of her legal obligations as an enduring POA. You don't want to risk any missteps with either the bank or other beneficiaries.

Here is one helpful link: https://estatelawcanada.blogspot.com/search?q=Power+of+attorney

_The law says that a person acting under an Enduring Power of Attorney must always act in the best interests of the person he or she represents. There are restrictions such as not being able to use the donor's money to give financial support or benefit to people who are not legally the donor's dependents._


----------



## Bruins63 (Jan 18, 2018)

OnlyMyOpinion said:


> Bruins, make sure your wife is aware of her legal obligations as an enduring POA. You don't want to risk any missteps with either the bank or other beneficiaries.
> 
> Here is one helpful link: https://estatelawcanada.blogspot.com/search?q=Power+of+attorney
> 
> _The law says that a person acting under an Enduring Power of Attorney must always act in the best interests of the person he or she represents. There are restrictions such as not being able to use the donor's money to give financial support or benefit to people who are not legally the donor's dependents._


Thanks for all the responses...in this case, my wife is an only child. The wills were written in her presence and everything goes to her...there are no other beneficiaries...She also happens to have POA and is executor...

Her Mom’s bank knows her Mom personally and knows my wife has POA and is an only child, and has never questioned any transfers as there was always full disclosure by my wife...Our bank neither has questioned any transfers...My wife’s Mom understands we are combining our resources jointly as we are all under 1 roof now and my wife is her caretaker...in short my wife’s Mom totally trusts her daughter, as she should, as there is no intent to wrong do...my question really is around tax implications and now, is this an ok way to proceed...?


----------



## OhGreatGuru (May 24, 2009)

If the money is in cash (no securities that have acquired capital gains) there are no tax implications. All the other comments relate to POA not appearing to be in a conflict of interest. As there are no other beneficiaries it's principally the bank that might ask questions about the transfer. You say you have used fake numbers in your example. If the real numbers are small, the bank likely wouldn't even notice, and even if asked one can explain that Mom is contributing to joint household costs, now that you are sharing a household. If it is a large sum, they might take a harder look at it and ask for some assurance from MIL that this is in accordance with her wishes.


----------



## OnlyMyOpinion (Sep 1, 2013)

It sounds like other beneficiary challenges are not an issue, and that the bank is willing(?) to allow such a transfer. 
If the funds are being used to house & care for MIL then the transfer should be justifiable. I wonder, why not just continue to draw funds from MIL's account as required. 

Coming from a chequing acc as you described, no, no tax consequences or forms. Any earnings & taxes in the new account (paltry or nil for most chq accs these days) will of course attribute to that acc holder(s).


----------



## humble_pie (Jun 7, 2009)

Bruins63 said:


> Thanks for all the responses...in this case, my wife is an only child. The wills were written in her presence and everything goes to her...there are no other beneficiaries...She also happens to have POA and is executor...
> 
> Her Mom’s bank knows her Mom personally and knows my wife has POA and is an only child, and has never questioned any transfers as there was always full disclosure by my wife...Our bank neither has questioned any transfers...My wife’s Mom understands we are combining our resources jointly as we are all under 1 roof now and my wife is her caretaker...in short my wife’s Mom totally trusts her daughter, as she should, as there is no intent to wrong do...my question really is around tax implications and now, is this an ok way to proceed...?



it seems to be a grey zone; if the MIL requires a live-in "caretaker" how well is she able to understand transfers out of significant amounts of her capital? if her intention when younger & not requiring live-in caretaking was to co-mingle accounts in joint accounts with her daughter, why did she not do so at that younger age?

i seem to recall also that large outbound transfers of capital during the 3 final years of a taxpayer's life will be scrutinized & questioned by the tax authorities ... might it be a good idea to obtain an opinion from the solicitor who drew the will or from an elder law specialist?

.


----------



## sags (May 15, 2010)

In the event that mom had to enter a nursing home, they would require bank account records and would certainly question any money missing from the account.

As the government makes up shortfalls in cash for those who cannot pay the full nursing home costs, they have a vested interest in such matters.


----------



## OnlyMyOpinion (Sep 1, 2013)

sags said:


> In the event that mom had to enter a nursing home, they would require bank account records and would certainly question any money missing from the account.
> 
> As the government makes up shortfalls in cash for those who cannot pay the full nursing home costs, they have a vested interest in such matters.


Not my experience as I recall. If going to a private room in a LTCH you are on the hook for your share ~$2600/mo in ON). If you are applying for assistance (hence in semi-private or ward) then they require T1 income. But I don't recall requiring bank statements?


----------



## OhGreatGuru (May 24, 2009)

OnlyMyOpinion said:


> ... This surprises me actually since a POA in not legally entitled to take funds....


I would not put it quite so bluntly (or absolutely). The POA is supposed to act in the best interests of the person granting the POA; and is supposed to carry out the wishes of that person. If a parent tells their POA "I want you to give $x to yourself as an advance on your inheritance; or as a contribution to my my care and keeping under your roof" I don't think it is inherently illegal for a POA to do it. The difficulty is with apparent conflict of interest. If the parent is not mentally competent it can be problematic, because a 3rd party can't determine if this is in fact what that person would have wanted, or if the POA is instead defrauding them to their benefit.

The lawyers here would probably advise that; if the MIL is still competent, that she draw up a new POA specifically authorizing the Attorney to make such transactions. But then, if the MIL in this case is competent, why can't she just write a cheque to the daughter?


----------



## OnlyMyOpinion (Sep 1, 2013)

^ Yes. I had revised my response and removed that comment.
W/d of funds to cover housing & care is certainly allowed.
It would be a concern if money was being moved with the impression that it is 'part of my eventual inheritance so I'll just take it now'. A POA might away with that - or not.


----------



## OhGreatGuru (May 24, 2009)

sags said:


> In the event that mom had to enter a nursing home, they would require bank account records and would certainly question any money missing from the account.
> 
> As the government makes up shortfalls in cash for those who cannot pay the full nursing home costs, they have a vested interest in such matters.



Only if you claimed you couldn't afford the standard rate (which is already subsidized in Ontario) and applied for further assistance. And OnlyMyOpinion suggests his experience is they only ask for income statement, not bank records. Which may possibly be a loophole in our social support systems, but that's another topic.


----------



## Plugging Along (Jan 3, 2011)

Bruins63 said:


> Thanks for all the responses...in this case, my wife is an only child. The wills were written in her presence and everything goes to her...there are no other beneficiaries...She also happens to have POA and is executor...
> 
> Her Mom’s bank knows her Mom personally and knows my wife has POA and is an only child, and has never questioned any transfers as there was always full disclosure by my wife...Our bank neither has questioned any transfers...My wife’s Mom understands we are combining our resources jointly as we are all under 1 roof now and my wife is her caretaker...in short my wife’s Mom totally trusts her daughter, as she should, as there is no intent to wrong do...my question really is around tax implications and now, is this an ok way to proceed...?


I would still make sure there are clear records and accounting. I am the POA for my mom, who is has recently been determine incapacitated. She had mental health issues and dementia is inserting. There are NO concerns with my siblings or parents about my ability to act in her best interests. The banks know me, but ask transactions as they knew my mom well. As a family, there is complete trust and we are all aligned however, I must still show due dliegience in case questioned. 

The better way to set this up if your mother is in good mental capacity, is to have your wife added on all the accounts as joint. There is more power to her than POA, and then she can do what she needs to do. This is what we have done to my dads accounts is add me as joint in case something happens to him. The reason joint is better on accounts is because if her mother passes away then all the account freeze until the executor can take of things, since a POA and executor opare two different things. A joint account will just continue on with your wife,


----------



## Plugging Along (Jan 3, 2011)

OhGreatGuru said:


> I would not put it quite so bluntly (or absolutely). The POA is supposed to act in the best interests of the person granting the POA; and is supposed to carry out the wishes of that person. If a parent tells their POA "I want you to give $x to yourself as an advance on your inheritance; or as a contribution to my my care and keeping under your roof" I don't think it is inherently illegal for a POA to do it. The difficulty is with apparent conflict of interest. If the parent is not mentally competent it can be problematic, because a 3rd party can't determine if this is in fact what that person would have wanted, or if the POA is instead defrauding them to their benefit.
> 
> The lawyers here would probably advise that; if the MIL is still competent, that she draw up a new POA specifically authorizing the Attorney to make such transactions. But then, if the MIL in this case is competent, why can't she just write a cheque to the daughter?


Correct. Our family said we were in an awkward position because my more was deemed incapacity, but she still wanted to move all of the funds to the kids. As her POA, I was also one of her beneficiaries. The lawyer said in our case she can’t make that request because of her mental state. Well, she could make the request, but it could be challenged. Then my siblings and all of us said there wouldn’t be a challenged, but decide we will just leave it. So if you do it, have her do it while she is fully incapacity.


----------



## leeder (Jan 28, 2012)

https://business.financialpost.com/...dos-and-donts-of-tax-free-gifts-in-canada/amp

Thought this is a pertinent article for the OP. I personally think the POA is not relevant based strictly on the Income Tax Act. CRA loves written documents, so I would suggest having some sort of signed memo/letter by all parties to indicate it is a gift and not anything else. If the amount is significant, perhaps having a 3rd party witness (lawyer) would be preferable.


----------



## Retiredguy (Jul 24, 2013)

humble_pie said:


> Plugging you are so right. I did the same for our mother, kept immaculate separate records about everything & quite often ran up expenses myself for various errands & purchases that i'd never reimburse.
> 
> the sibs never asked about the records, never even seemed interested. They seemed to trust me totally. Periodically i would offer to show or send them documentation, but they would always decline because they were too busy, they said, & anyhow they were sure i had everything in good order.
> 
> ...


HP - Its nice to hear that everything worked out so well and your intentions were all good no doubt. However a basic tenet of a PA is confidentiality and unless the PA explicitly said you could share the information with your siblings you likely violated the PA by just offering up the docs and info to them. If your mother had given her PA to a friend and you wanted information, on what basis would you be entitled to it? Or do you think it would be OK for them to share information with you or anyone else they chose.

PA's are not necessarily a simple document and can have many things stated. In another post it's been stated that a PA cannot benefit or gift themselves. Again it depends what the PA says. My spouse was PA for one of their parents and the PA explicitly said my spouse could in their "absolute discretion" make dispersements to family members including themselves. The PA was drawn up by the parent and their lawyer. Also beneficiaries are not beneficiaries until the death of the Will maker (they have no standing during the life of the maker) but in my spouse's case the family did know the contents of the Will in advance as the parent intentionally told everyone and when my spouse did make dispersements they did so based on the Will. Like you my spouse kept detailed records and all went well.


----------



## humble_pie (Jun 7, 2009)

Retiredguy said:


> HP - Its nice to hear that everything worked out so well and your intentions were all good no doubt. However a basic tenet of a PA is confidentiality and unless the PA explicitly said you could share the information with your siblings you likely violated the PA by just offering up the docs and info to them. If your mother had given her PA to a friend and you wanted information, on what basis would you be entitled to it? Or do you think it would be OK for them to share information with you or anyone else they chose.
> 
> PA's are not necessarily a simple document and can have many things stated. In another post it's been stated that a PA cannot benefit or gift themselves. Again it depends what the PA says. My spouse was PA for one of their parents and the PA explicitly said my spouse could in their "absolute discretion" make dispersements to family members including themselves. The PA was drawn up by the parent and their lawyer. Also beneficiaries are not beneficiaries until the death of the Will maker (they have no standing during the life of the maker) but in my spouse's case the family did know the contents of the Will in advance as the parent intentionally told everyone and when my spouse did make dispersements they did so based on the Will. Like you my spouse kept detailed records and all went well.



the power of attorney that i held was a broad power of attorney drawn up by a well-known lawyer who knew my mother & all the family members well. The document nothing about not sharing information with other parties, particularly parties who were, as we all knew, heirs to the matriarch's eventual estate. We were & are an affectionate, trusting family. Our mother wanted us to go on helping each other.

the comical thing was that my sibs kept on saying they didn't really want to know anything. Meanwhile, my attorneyship happened to coincide with a powerful bull market. So when the will was opened, they were flabbergasted, not to say delighted.

each grandchild of major age received a legacy of $20,000. Everyone was gathered at tea to discuss the will, the sibs knew by then but the grandchildren knew nothing. They were beyond stunned. I remember grandson Louis saying he thought i was going to tell them that their grandmother had left them each a silver teapot or some limoges china or something, he couldn't believe 20k ... grand-daughter Louise saying w saucer eyes OMG now i can pay off my car ...

there were 2 grandchildren still of minor age, so i had to hold their $20k in trust. They, too, were angelic. Never asked for a penny. Upon each of their 18th birthdays i delivered a cheque, although feeling, in retrospect, that perhaps the will should have specified age of 21 years.

all in all, a very happy experience. If she had been alive, the mother would have been so pleased.


----------



## twa2w (Mar 5, 2016)

Most provincial legislation dealing with substitute decisions clearly state that the POA must keep records and that certain parties may apply to the courts to have these records passed or examined. Most specify cettain parties but indeed, almost anyone can apply for leave to the courts to do this. ( of course they must show what their interest is and the judge has to agree so usually only family members (or sometimes close parties who suspect some abuse of POA)). 

As a POA, you do not want to be caught offside on your record keeping or use of funds.

If the person is incapable, and the POA is being acted upon, the will is part of the property that the POA is responsible for.
I don't suspect the POA would be too far offside of privacy rules if they gave a simple accounting of monies in and out to parties named in the will. Esp for elderly folks. They would not have to disclose assets.

Of course at death, the will and all records go to the executor and the POA ceases.


----------



## OhGreatGuru (May 24, 2009)

If Mom is still capable, and the bank is familiar with the situation, it might be better all around to make an appointment at the bank and change the checking account to joint (JWROS) . That makes Mom's' intentions clear, that daughter has access to the account, and right of survivorship. Any transactions daughter makes on account can be in her own name, rather than as POA. And it would make sure it isn't subject to probate. The only risk is that it becomes an asset that a creditor can go after if daughter becomes a debt defaulter. We do not know if there is any likelihood of that in this case.

Theoretically it would make it easier for the daughter to run off the money, but it doesn't sound like that is a concern in this case. My father made most of his current accounts joint with me when I took over management of his finances.


----------



## Plugging Along (Jan 3, 2011)

Retiredguy said:


> HP - Its nice to hear that everything worked out so well and your intentions were all good no doubt. However a basic tenet of a PA is confidentiality and unless the PA explicitly said you could share the information with your siblings you likely violated the PA by just offering up the docs and info to them. If your mother had given her PA to a friend and you wanted information, on what basis would you be entitled to it? Or do you think it would be OK for them to share information with you or anyone else they chose.
> 
> PA's are not necessarily a simple document and can have many things stated. In another post it's been stated that a PA cannot benefit or gift themselves. Again it depends what the PA says. My spouse was PA for one of their parents and the PA explicitly said my spouse could in their "absolute discretion" make dispersements to family members including themselves. The PA was drawn up by the parent and their lawyer. Also beneficiaries are not beneficiaries until the death of the Will maker (they have no standing during the life of the maker) but in my spouse's case the family did know the contents of the Will in advance as the parent intentionally told everyone and when my spouse did make dispersements they did so based on the Will. Like you my spouse kept detailed records and all went well.


The confidentially was not what our lawyer nor the banks told me. They said that anyone who might be a beneficiary could ask for me to account for the my mothers funds. I had complete discretion, ‘without any constraints or limitations ‘ was the wording. My siblings and family didn’t care, it was the banks. I had the duty to act on my mothers behalf and best interests and was told I could be called on it.


----------



## Plugging Along (Jan 3, 2011)

humble_pie said:


> the power of attorney that i held was a broad power of attorney drawn up by a well-known lawyer who knew my mother & all the family members well. The document nothing about not sharing information with other parties, particularly parties who were, as we all knew, heirs to the matriarch's eventual estate. We were & are an affectionate, trusting family. Our mother wanted us to go on helping each other.
> 
> the comical thing was that my sibs kept on saying they didn't really want to know anything. Meanwhile, my attorneyship happened to coincide with a powerful bull market. So when the will was opened, they were flabbergasted, not to say delighted.
> 
> ...


This is how I hope things remain in my family for when the time comes with my parents. My dad who is oerfectly able ahas said that it’s not able the money but the relationship, so if we want to honor them, even if money issues comes up, we will push them aside for the big picture


----------



## marina628 (Dec 14, 2010)

I am lucky to have healthy parents ,Dad will be 80 his birthday and Mom will be 79 .For the last few years they have been gifting money to their adult grandchildren to help with university and give to my sister more or less on a monthly basis .My husband and I bought their home the year my brother died and the deal is they live in it til they pass and we have been renovating around them since that time for their benefit and ours.


----------

