Your child is getting married and you want to help out financially.  What is the best way to do this? 

Here are a few options:

GIFT:  You could give your child an outright gift.  The advantage to them is that any gift given while you are living is tax free.  If given after your death, the gift is subject to probate.

If you do not care about protecting this money,  then an outright gift would be fine.  Should your child and spouse separate, the spouse would get half of your gift in settlement.

2nd MORTGAGE: By being on title, you protect this money from being lost in a separation.  One disadvantage is that any gains on your part are subject to capital gains tax.  Another disadvantage for the couple is that they would need your signature in order to sell that home. 

LOAN:   A third option is to give your child a loan.  If it is an unregistered family loan (that you would keep in your safety deposit box), there would be no tax implications, as Canadians can sell their primary residence without paying taxes on the increase in value.  Should the marriage fail, you would have a legal means to get your money back.  You could decide to include in your will a clause that would forgive this loan at that time.

We all wish our children to remain happily married, but reality is that there is a high percentage that don’t last.  Please consider the implications of how you wish to help your children out financially, so that you don’t regret your helpfulness.