Congratulations! Becoming a grandparent is an exciting time and many people feel that having grandchildren is one of the most important and satisfying experiences in life. The items below are three roles you can be in the lives of your children.
Grandparents as Teacher
As a grandparent, you are a beloved, trusted source of knowledge for your grandchildren, and an important role model. Fiscal responsibility is an important focus and you can do so when simple teachable moments arise:
- If you choose to give monetary gifts for birthdays or holidays, gently encourage smart spending and saving Give your grandchild their first “piggy bank” or encourage a trip to the bank to open a first savings account.
- As they get older, talk to your grandchild about the value of hard work and earning an Share stories of your own career and don’t be afraid to share any challenges you had to overcome. Good or bad, your life experiences contain valuable lessons.
- Help them set financial Offer incentives (monetary or otherwise) when they reach them.
- Discuss “needs” “wants” and how to prioritize them. Children are bombarded with marketing messages through access to technology. Help them become disciplined spenders (and savers) by modeling these behaviors yourself.
- Discuss the risks and rewards of Consider opening an investment account in their name and teach them to read the statements over time. Explain the value of compounding growth.
Grandparents as Benefactor
Helping to fund a grandchild’s education is one of the best gifts you can give. 529 plans can be a useful tool to boost college savings. A 529 savings plan is a tax-advantaged way to save for higher education expenses. Withdrawals are also free from federal taxes as long as they are used for educational purposes. Tax treatment at the state level may vary. You can contribute up to $30,000 per year as a couple (or $15,000 per year as an individual) without filing a gift tax return. Talk with your financial advisor about choosing the best 529 plan for you.
Grandparents as Legacy
Bringing the next generation into the world surely has a way of putting things into perspective. As you become a grandparent, you may find yourself instinctively thinking about your legacy and the lasting “imprint” you want to leave on your family. With the new addition to your family, now is an ideal time to evaluate your Estate Plan and the important documents that you should have in order, including your Will.
Your will is a legal document that provides specific instructions for distributing your estate when you die. With the birth of a grandchild, you may wish to make updates to your Will.
The most important part of your legacy is not the “stuff” you leave behind. It’s the memories you create with your family. Spending time with your grandchildren helps create time and space to share with each other. Even if they don’t fully appreciate what you tell them today, it will stick with them for life!
The opinions voiced in this material are for general information only and are not intended to provide specific legal or financial advice or recommendations to any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
- savingforcollege.com “States that Do Not Conform with Federal 529 Plan Tax Laws”
- irs.gov “Frequently Asked Questions on Gift Taxes”
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