Best Gifts for Grandchildren – Why wait Thirty Years To Give Them Their Gift?

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This article is brought to you by Insurance For Children and the creator of Child Plan ™ the fastest growing alternative to the RESP. Child Plan, One Plan For Life. 

What financial gifts can grandparents give their grandchildren and when? 

Many grandparents have the same question when they learn they will become grandparents. What can I do to help my grandchild’s life and why do I need to wait thirty years to leave them a gift?  

Of course, grandparents want to give them something meaningful and special for this special new addition to their family. The grandchild is a symbol of the continuation of the family and setting up something for their financial future is important to ensure the family will grow and prosper.

There are many great financial gift options, but choosing the right one is personal, specific, and has many implications when you want to give it to your grandchild. 

This article will examine some of the best financial gifts for grandchildren, to ensure their future and help them thrive.

We’ll explore the various options grandparents have when investing for their grandchildren’s futures. Grandparents more than anyone understand how uncertain life can be and that setting up a financial foundation as early as possible is the best path to financial security and a happy life. Grandparents understand that while money doesn’t buy happiness it does buy options, and the more options their grandchildren have in the future the more successful and happier they’re going to be.

Financial Gifts for Babies

In Canada, grandparents have very limited financial options that they can set up when their grandchildren are born.

While the grandparent’s principal residence is where they intend to live throughout their lives and will be intended by their children tax-free, all other investments including, investment properties, company shares and cottages will all be taxed either in their estate when transferring them to their children or their grandchildren or at the time they want to transfer it to their grandchildren while they’re alive.

Let’s examine which options are available for grandparents when investing for their grandchildren’s future.

While Canada has no gift tax, depending on the amount of the financial gift and the type of investment it may trigger severe tax consequences.

Additionally, children under the age of 18 in Canada are not permitted to own company shares if the grandparent has a company business or individual stocks in an investment account. Children under 18 in Canada are also not able to open their own bank accounts which is the reason they are opened by their parents on their behalf.

This particular type of account which is promoted by banks and investment advisors is called an informal trust. That means the account is in trust for the child and unlike a formal trust with these accounts, the grandchild can walk into the bank on the day they turn 18 and withdraw all the funds you worked hard to save, without your consent and they can’t be denied access by the bank. 

Grandparents often ask why they need to wait 30 years to leave their grandchildren a financial gift for their future and is there a better option than spending thousands of dollars every year on gifts that the children will lose interest in within days.

Should Grandparents Open An RESP for Their Grandchildren

While grandparents can open an RESP account for their grandchildren, the process of opening the account and funding the account during the grandchild’s life is very complicated. The biggest issue facing grandparents who are choosing to open an RESP account for their grandchildren is that the parents may want to open an account of their own. 

If there are two RESP accounts for the same child the grandparents and the parents must now coordinate who’s contributing how much to each account since there are annual contribution limits to an RESP. Additionally, the issue becomes who manages the investments in each account and how the money can be withdrawn when they are needed in order for the grandchild to use the funds for their education.

SInce the maximum CESG grants is only 20% of whatever was contributed up to a maximum of $500. The maximum RESP contribution parents and grandparents should make into a Child’s RESP account is limited to $2500 annually. 

That means that if the grandparents contribute $2500 to their grandchild RESP account which they set up and the parents contribute $2500 into their child’s account which they set up. The child only receives a one time CESG grant totaling $500 and not $500 per account.

What is an option for grandparents if parents want to open their own RESP account for their child. Child Plan ™, participating whole life plan, is the only tax-free investment both grandparents and parents can set up for their children in Canada. From the day the plan is opened, your grandchild will receive a tax-free annual dividend for life.

With a Child Plan ™ for Grandchildren, grandparents are able to set up the plan for the grandchild’s future as early as 14 days after they’re born, leaving the parents to set up the RESP account if that’s what they wish to do.

Additionally with a Child Plan ™ grandparents are able to set up a plan for each individual grandchild. This removes a lot of the strain within the family and if one child chooses to go to university and one child chooses a different path, with a Child Plan ™, both children will get the gift their grandparents set up for them when they were born. 

But the biggest benefit with Child Plan ™ for a grandchild is that all annual dividends are paid into the plan completely tax free during your grandchild’s entire life. No taxes to the grandparents and no taxes to the grandchild, even after they turn 18. 

Additionally, when grandparents are ready to transfer the Child Plan to their grandchild after they turn 18, there is absolutely no taxes when transferred regardless of the cash value in their plan. No taxes to the grandparents when transferring and no taxes to the grandchild, when receiving. 

Tuition money

Tuition and other costs for post-secondary education will get more expensive in the coming years. The gift of tuition money is a great way to relieve some of the financial burden of those costs for your children and grandchildren. However, most education investment options are limited.

While grandparents may wish to pay the tuition for their grandchildren’s education, the challenge they face is the source of the funds to pay the tuition. If the grandparents use funds from their RRSP, they must pay the full income tax on any withdrawals in order to pay the tuition. For example, if the tuition costs are $15,000, the grandparents will need to withdraw over $22,000 in proceeds from their RRSP in order to pay the tuition of $15,000.

If the grandparents wish to pay the tuition from other sources of investments, they will be required to sell the investments and pay the capital gains taxes, dividend taxes, plus all investment fees in order to have the net proceeds to pay the tuition.

This is where Child Plan ™ comes in. With Child Plan ™, the grandparents can set up the plan as early as 14 days after the grandchild is born and make the annual deposits until the child turns 20. When the grandparents are ready they can transfer their grandchild’s Child Plan ™ which they set up when they are a baby, completely tax-free to their grandchild in order for them to use it for their education even if there is tens of thousands of dollars of cash value.

Additionally, their grandchild can use the cash value in their Child Plan ™ not only for any education program anywhere around the world but also to make the down payment on their first home and for any financial need in life.

To learn more about Child Plan ™ for Grandchildren, please visit


Can I set up a Child Plan for my grandchild in my name as the grandparent, or does it have to be in my child’s name to hold in trust for my grandchild?

You can open a Child Plan and be the sole owner if you wish until such time that you want to transfer it to your grandchild.

Are there any fees or taxes when I transfer the Child Plan to my grandchild?

There are absolutely no fees or taxes to you or your grandchild to receive the Child Plan gift you set up for them.

Does the Child Plan have to be listed in my will in case something happens to me before I get an opportunity to transfer the Child Plan to my grandchild?

No. Child Plan allows you to set up your grandchild as contingent or backup owner of their own Child Plan. If something happens to you, the Child Plan will roll over completely tax-free and without any probate fees outside your estate to your grandchild.

This article is brought to you by Insurance For Children, Canada’s leader in financial planning for children and the creator of Child Plan ™ the fastest growing alternative to the RESP.

Sample illustration of Child Plan™ Cash and Insurance Values

Based on a Monthly Deposit of $250 per month

Age Accumulated Cash Value Life Insurance Value
20 $82,568 (Education) $612,728
35 $177,953 (House) $1,115,297
45 $303,299 (Security) $1,115,297
65 $834,276 (Retirement) $1,666,824

Sample illustration is based on a monthly contribution of $8.32 a day/$250 a month for twenty years, starting when the child is less than 1 years old. Cash and life insurance values are based on the current dividend interest rate of 6% from a Canadian life insurance company. This example is strictly for illustrative purposes only, the annual dividend scale is not guaranteed and values may differ.

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*illustrations are reflective of the annual premium amount

To learn more how Child Plan will provide your child with the funds for their future education and financial security for life, book a virtual meeting with a Child Plan Advisor.

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