One of the greatest joys in life is becoming a grandparent. When your adult children start having kids of their own, you will quickly realize that spending time with their babies is a lot more fun than being the one with the child-rearing responsibilities.
That said, most grandparents still want to help in any way they can by spending time with their grandkids and/or saving money for their future. Every year it gets more expensive to pay for a college education, but the fact is that getting a Bachelor’s or Master’s Degree is vital to their future earning power.
A person’s ability to support themselves and purchase their own home are both largely affected by whether or not they go into a professional career. One of the best ways to help your grandkids is to start a college fund that can ensure they have the opportunity to reach these goals.
What You Need to Watch for
When it comes to saving money for your grandchildren, there are a number of options available to you. It’s important to understand the pros and cons of the various types of accounts first. Opting to put the money in a traditional savings account is a safe bet, because there’s no risk of losing the principal. The downside is that you will have very minimal gains from interest over the years. There are a variety of trusts and other investments which can yield a much better return and also take advantage of any tax savings possible.
Since you may have 18 years or more before you plan to give your grandchild access to the money, choosing an investment vehicle with greater earning potential, such as a brokerage account, may be a better choice. Your advisor can offer financial advice regarding how to manage risk now and when your grandchild gets closer to their college years.
You’ll also need to decide who owns the funds, because if you put the funds in your grandchild’s name, it will affect their chances of receiving financial aid from the Federal government. In addition, the name on the account will also determine who gets access to the funds. Unless you want a teenager to be able to get into his college savings any time he chooses, you’re better off making yourself the owner of the account.
Who You Need to Talk to
An estate planning attorney helps you ensure that your family’s legacy is passed on to the family. Located in the city of Newport Beach in Southern California, Jeffrey M. Verdon has been working for over three decades to help his clients protect their wealth now and plan for their family’s future.
His experience working with high asset individuals makes him uniquely qualified to advise on how to structure investments in a way that offers security from both excessive taxation and legal action. An Asset Protection Trust is one particularly effective tool to achieve this goal.