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SKI’Ing – Spending the Kid’s Inheritance and Other Ways to Manage What You Leave Behind


Published January 24, 2019 • 6 Min Read

Have you thought about the legacy you’ll leave behind? Maybe you’ve earmarked money or property to pass along to your children, or a charity that’s close to your heart. Whatever you’re thinking of leaving, there is no one way – or right way – to handle it. What you do with your money, real estate, artwork or that cherished porcelain doll collection depends on your personal goals, what you want to provide for your children or grandchildren, how you want to support charities that matter to you and how taxes might play a role.

While there are countless ways you can plan what you leave behind and how you leave it, here are three approaches worth considering.

1. SKIing – Spending the Kid’s Inheritance

Given there’s an actual term for spending the kid’s inheritance (SKIing), you know someone else is doing it. In fact, more retirees than ever are spending their kids’ inheritance – whether motivated by practical reasons or a well-deserved desire to live their best lives with the money they’ve worked hard to save. Is this something that you have been thinking about?

If you’re healthy, fit and ambitious, there’s nothing wrong with using your money to have fun, tackle a new challenge, or build up your legacy. Many retirees are SKIing to fund lifelong dreams or new passions, including:

  • Travel and adventure. Maybe there’s a city, country or landmark you’ve always wanted to visit. Maybe some friends are taking a cruise or you’d love to move down to Florida for part of the year to escape the Canadian winter.

  • Starting a business. Always dreamed of opening your own business? Many retirees take this time in their lives to explore their entrepreneurial side.

You may have other things you want to achieve (maybe climb Kilimanjaro or visit Angkor Wat?) or you simply want to enjoy your money while you’re able to. Whatever’s driving you, it’s your choice.

2. Leave Your Money (and Headaches) behind in a Will

Undoubtedly the most traditional way of leaving an inheritance, a will lets you outline exactly how, when and to whom you want to leave your assets. There are some perks to this approach.

  • Don’t want to deal with questions about how much you’re leaving and who’s getting what? Putting all the details in a will lets you bypass conversations you may not want to have now. Let them deal with it later!

  • It can help sidestep a tug of war over the piano or grandma’s sapphire ring. When everything is laid out clearly and unconditionally in a will, this kind of conflict between family members can be avoided. Just remember, clarity is key!

  • If you’re not sure how much you need to live out the retirement of your dreams, keeping your money and assets in your name will help you manage your lifestyle without impacting your future. You never know how long your retirement is going to last!

  • Not sure how your kids will handle a large sum of money? You can set up a trust that gives them access to your assets once they reach a certain age or meet other conditions, giving you the peace of mind that they will be ready to make the most of their inheritance.

3. Give It Away While Your Kids Can Still Thank You

If you have money squirreled away that you never intend on touching, chances are you’re paying tax on it – and quite possibly at a high rate. But, if you gift the money to your kids or grandkids now, they may pay a smaller amount of tax on those same funds – and less tax means more money to go around.

There are also some emotional benefits that come with gifting money and property now versus later. But like everything, there are some challenges too. Here are a few things to keep in mind:

On the tax and practical side of things…

  • There is no gift tax in Canada, so taking money out of your TFSA or savings accounts to give to your kids can be done tax-free

  • If you’re thinking about giving property as a gift, Capital Gains tax comes into play – whether the property has gone up in value in the years since you’ve owned it, or it’s expected to rise once you gift it. It’s a good idea to speak with a tax expert if you’re thinking about gifting real estate so no one is surprised by a hefty tax bill down the road

  • You can help your children pay down debt – such as a mortgage or student loan

On the emotional side of things…

  • By gifting assets now, you can see the benefit of your gift first hand – whether it’s to help buy a first home, send a grandchild to college or university, help your kids launch a business, or realize another goal that’s important to them.

  • You could treat your child or grandchild to a special experience they otherwise wouldn’t be able to have – like a month-long trip to Europe after graduation, or a kitchen reno.

What’s the best way to handle what you leave behind? Ask yourself three questions.

Naturally everyone’s situation is different, so to figure out what’s right for you and your family, start by asking yourself these questions:

  • What have you always wanted to do, but never had the freedom/money/time to make happen? Perhaps there’s a place you’ve dreamed of seeing or a challenge that remains unmet. If you’ve got unchecked boxes, think about how you could get things done.

  • Are their opportunities you could give your children? Consider the joy of being there to help them buy a home, treat them to something extraordinary, pay off student debt, or help build a secure financial future for their own families.

  • Do you have a good handle on how much you need for your retirement? If you’re not sure how to balance what you need and what you can leave, you may be better off to hold on to your money for now.

Whether you choose to SKI, gift assets or you prefer to hold money back for the kids, managing what you leave behind can be done a few different ways – and the path that you choose depends on your personal, financial and family situation. There’s no right way, and there should be no pressure to choose one direction or another. Your life, your money!

Want to learn more? Visit our Retirement Hub or speak with one of our RBC advisors who can discuss your options with you.

1 –, January 2018

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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