Financial Corner: Grandparents: Consider These Financial Moves

Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Each year, on the first Sunday after Labor Day, we observe National Grandparents Day. Although it’s not as widely recognized as Mother’s Day or Father’s Day, if you’re a grandparent, you probably want to do whatever you can to help your grandchildren on their journeys through life.

So, you might want to consider the following moves:

  • Grandparent Paying for SchoolContribute to their education. If you want to help your grandchildren pay for college, you have a variety of options, including 529 plans. You could also simply set aside some money in an investment account earmarked for education. But you don’t just have to stick to helping out financially – you might also want to do some research to see what scholarships are available.

  • Consider a UGMA/UTMA account. The Uniform Gifts to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) are custodial accounts that provide a relatively easy way for you to give money to your young grandchildren. A financial advisor can help determine if such a plan is right for you. However, once you put money into the UGMA or UTMA, you no longer have any legal access or authority over the funds unless you are the custodian managing the account.

After children reach the age of majority – typically 18 or 21 – or the age of termination if the state where they live allows for the assets to be held until a later age, they will control the assets, and they may not want to use the money as you had envisioned, such as for college. (Also, tax issues for custodial accounts can be complicated, so, before opening an UGMA or UTMA, you’ll want to consult with your tax advisor.)

  • Consider gifts to older grandchildren. If you have older grandchildren, you might want to help them out if they’re saving for a down payment on a home, or are between jobs, or perhaps are even having children of their own. You can give $15,000 per year, per individual, without having to file a gift tax return. Your spouse can also give $15,000 per year to the same individual, again without triggering the need for a gift tax return.

  • Grandparent Paying from WillReview your will. If you’ve already created your last will and testament, you may want to review it upon the arrival of grandchildren. You can include specific instructions, such as requiring your grandchildren to turn a specific age before they can receive their inheritance. You could also codify the same requirements through the use of a living trust. Contact your legal advisor to determine if such a trust is appropriate for your situation.

  • Update beneficiary designations. If you want your grandchildren to receive proceeds from various accounts, such as your 401(k), IRA and life insurance, you may need to update the beneficiary designations, which can even supersede the instructions on your will. Keep in mind that if you have grandchildren with special needs, you may want to designate a supplemental needs trust for your grandchild as the beneficiary instead of naming your grandchild directly. Again, contact your legal advisor for more information.

These aren’t the only steps you can take to help your grandchildren, but they should give you some options to consider. The world is an expensive place, and any assistance you can provide to your beloved grandkids can make a big difference in their lives.


Review John-Paul’s Financial Corner Articles:


“If anyone has any questions please reach out and use me as a resource. If anyone in this community wants to pick my brain or has concerns about what’s going on in the market, I’d would be happy to make myself available.”

Bio of Local Resident John-Paul:

John PaulHi, my name is John-Paul Tancona and I’m a financial advisor with Edward Jones. I have over 19 years of experience in this industry, working with both institutional and retail investors.

John PaulI earned my bachelor’s degree at Villanova University in 2000 and immediately started my years journey into the world of finance. My first 13 years were spent working at high profile wealth management firms covering large institutional investors. Recently, I joined Edward Jones and changed my focus to educating and empowering individual investors so they can achieve all of their financial goals.

We believe in working with investors one on one, either at your local Edward Jones office or conveniently at your kitchen table. We want to find out what is most important to you and your family so we can take you through our established process and partner together for life.

Whether you’re planning for retirement, saving for your children or grandchildren’s college education or just trying to protect the financial future of the ones you care for the most, we can work together to develop personalized solutions tailored specifically to help you achieve your goals.

I live in Sparta with my wife, Julieann, and two children: Dominic (10) and Daniel (7).

My branch office administrator, Ellen Hawkins, has 35 years of experience and is dedicated to offering you an ideal client experience.

I look forward to answering your financial questions and concerns. Please contact me to discuss your options so you can make informed decisions about your unique financial situation.   

Comments powered by CComment