“The Tax Free Savings Account (TFSA), can serve as a ‘golden goose’ that provides ‘golden eggs’ in the form of tax free-interest, tax-free dividends and tax-free capital gains.” says Dave Lee, Senior Wealth Advisor from Scotia Wealth Management in White Rock.
“Instead of waiting to pass on your wealth through inheritance, consider helping your adult children maximize their own TFSAs now. This approach not only benefits your loved ones but also offers a more strategic solution for those with an abundance of assets.”
Many of Dave’s clients have built wealth through decades of hard work, careful planning and wise investments. For those with more than enough for their own retirement, the question often becomes how best to share that wealth with the next generation.
While there are various ways to achieve this, Dave suggests an often-overlooked approach: transferring future inheritances sooner rather than later through the use of a TFSA.
“Contributing funds to a TFSA in your loved one’s name is an excellent way to plan for their future while also reducing your own taxable income,” Dave explains. “Once in a TFSA, that inheritance has the opportunity to grow tax-free, giving your family members an early ‘nest egg’ or ‘golden egg.’ This strategy lets your wealth grow within their TFSA for their future, free of taxation.”
The 'golden goose' of TFSA opportunities
When the TFSA was introduced in 2009, it had a modest contribution limit of $5,000, which has grown steadily over the years. Today, any Canadian adult who has been a resident since 2009 has accumulated a total contribution room of $95,000. For families looking to transfer wealth tax-efficiently, the TFSA has become a powerful tool — a “golden goose” that keeps on giving.
“Imagine a family with two adult children. Parents could contribute up to $28,000 each year by funding their children’s TFSAs, shifting funds from taxable accounts into tax-free growth,” Dave says. “Not only does this preserve wealth, it also encourages responsible financial planning among the younger generation. Over time, these ‘golden eggs’ can form a stable foundation for the next generation to build upon.”
The holiday season: A time for thoughtful giving
With the holiday season approaching, now is an ideal time to consider if gifting an early inheritance might be a valuable step for your family. By using the TFSA as your “golden goose,” you can begin passing down generational wealth that grows tax-free, setting your loved ones on a path to financial stability for years to come.
For more information, contact Senior Wealth Advisor, Dave Lee CIM, CFP, FCSI, at Scotia Wealth Management in White Rock by email at dave.lee@scotiawealth.com or by phone 604-535-4743.
Read more from Dave Lee online at www.dave-lee.ca/publications.