Multi Generational Savings and Income payout | General financial discussion | Discussion forum

You need to provide a bit more info in terms of WHO would be accessing this money, and the current age of your daughters. An RESP vehicle works for kids that will be going to university but it is not something that can continue beyond a certain period of time.

TFSAs in each of you and your adult daughter's names (must be 18) is another tax 'free' vehicle but has contribution limitations.

Trusts are another matter entirely and are not tax effective with recent rule changes that are (will be) taxing trusts at "highest" personal rates. Trusts are beyond my pay grade to comment on.

Bill said
High tax rate for trusts isn't an issue if income of beneficiary is low enough to pretty much avoid taxes.  

True if the income is always passed through to stated beneficiaries each and every year. Not what I understood in the OP's post. The OP seems to want it to be flexible, e.g. potentially anyone can contribute to the trust when they want too, and income only comes out for targeted uses to certain people at certain times. Not doable in my opinion.

Saver-Mom said
Actually may be illegal given atribution rules.
Just gift your kids money when you want to.  

Parents can pay for the education of their children, minors or not, but cannot gift them money without attribution. Once they are adults, they can be gifted any amount of money without consequences.

One can also loan the money to the minor. Attribution rules won't apply as long as interest is charged and is at least the "prescribed rate" at the time the loan is made.

The "prescribed rate" used to be 1% per annum. I think it is now 2% per annum.

Some details are at BDO Canada: Increase to Prescribed Rate Loans for Income Splitting coming April 2018.

Not sure if by "retirement fund" you are referring to an RSP, but if so, there's no mechanism that I'm aware of that would enable you to make loans from it to your children. If OTOH you mean non-registered funds, you can do whatever you want as long as you paper it up properly

This is how it seems to me:

I don't think there is a good mechanism to do what you want, although it's a nice idea.

It seems to me that you are essentially trying to create an endowment, i.e. a fund which can exist in perpetuity for a particular defined purpose (although it may go by a different name), namely to provide income supplements and/or bursaries for students who are members of a particular family.

Endowments are normally charities, but the rules for charities do not allow the disbursements to be restricted to family members. Indeed some scholarships have had to be redefined because the criteria for receipt were so narrow as to be discriminatory. There was an infamous case about this at Trinity College, University of Toronto, a number of years ago, the details of which currently escape me.

I don't think that there is a set-up for non-charitable endowments.

Even if you do find a mechanism, it would have to be administered in perpetuity, and the administrative costs and complications would be prohibitive. As Bill implies, families change over the generations, and it would become a nightmare to try to ensure your intentions were maintained.
There is a famous case in the lore of wills and estates and charitable gifts of someone who left a large amount of money which was to be used solely to provide apples for the horses in the police department in, if memory serves, Philadelphia. This was back in the 1700s or so, when internal combustion was unheard-of. Things will change in ways that are currently unimaginable.

Loans would work in the short term, but the account still has to have people who are responsible for it, i.e. signators / decision-makers; and the same difficulty comes up of transferring that responsibility through the generations. In all likelihood, something would go wrong within a couple of generations.

Best bet is probably to do everything you can to pass on a generous inheritance, and to ensure that your daughters get a good start in life so that they can do the same. Wealthy people never have trouble paying for their university education.

You can also start a family tradition of giving to RESPs for children rather than buying them toys etc that will soon be discarded. TFSAs can also be used starting age 18, as has been suggested.

The tax breaks, when they come, will be in the form of whatever tax breaks are then available to postsecondary students, such as deductions or tax credits for tuition etc. It's not reasonable to also expect a tax break when you set the money aside.

If you find yourself in position to do so, you could also consider charitable donations to universities. You can earmark them to support student bursaries and scholarships. They won't necessarily be doled out to your family members but you will be contributing to an educated society. I certainly appreciated the money I received in this way.

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