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Grandparents and Gifting: 3 Savvy Options

By Paula Brancato, Barnum Financial Group

 

Many grandparents struggle with what to give their grandchildren on birthdays or holidays. They may not know about the latest digital toy, out of fashion by the time a birthday comes around, and they worry about getting grandchildren the wrong label or size of clothing. Mostly, they worry about the financial security of their children, their grandchildren and their legacy.

So, how do you give a gift that keeps giving, even when you may not be around – a gift that would be exemplary and a legacy?

Here are 3 options for savvy grandparents today.

#1 Permanent Life insurance is the gift that lasts a lifetime. Grandparents who give the gift of permanent life insurance to their grandchildren are giving them a building block to help secure their financial futures. Permanent life insurance can create a secure nest egg that will continue to grow over time. Equally important, you are protecting your child’s insurability, providing coverage regardless of health circumstance s that can a do change later in life.

In addition, a permanent policy with cash value offers a safe and secure way of creating a financial asset that grows on a tax-deferred basis and may be used for:

Education expenses
Down payment on a first home
Wedding expenses
Capital to start a business
Emergency funds

The plan also guarantees your children the ability to have life insurance later in life. This means protection for their future family regardless of any changes in their health.

#2 Annuities – Most people think of annuities as ways to provide income in old age. But an annuity may work for anyone at any age. A grandparent may buy an annuity and designate a grandchild as beneficiary. Every year on the grandchild’s birthday, for instance, a $1000 gift may be made to the grandchild by the grandparent, whether living or deceased.

#3 Outright Gifts – A grandparent, or anyone, may gift $14,000 a year to a child without gift taxes or filing gift tax returns. The gift may be given outright and or invested for the child, for instance in a tax-advantaged 529 plan for college.

To learn more about creating a plan to secure your child’s or grandchild’s future, please contact Paula Brancato at paula.brancato@barnumfg.com. It is never too early to start!

Paula Brancato MBA, CFP®, CEPA, CLTC is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. www.sipc.org 6 Corporate Drive, Shelton, CT 06484, tel: 203-513-6000. Paula may be reached at paula.brancato@barnumfg.com or 646-813-9590

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The information provided is not written or intended as specific tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

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