By Tiffany Williams, Managing Executive, FineMark National Bank & Trust office at Shell Point Retirement Community
It’s common for grandparents to want to shower their grandchildren with gifts, including toys, clothing, trips, dinner outings, and even a little cash slipped in their pockets here and there. However, there can be important tax advantages in making lifetime gifts to grandchildren, such as funding for educational expenses, a first home, starting a business, or a life insurance program. The following are ideas for lifetime gifts you might want to consider for the long-term benefit of your grandchildren:
- Trust Gifts to Minors – an account in a minor’s name where a custodian has a fiduciary duty to manage the account until the minor reaches the age of majority, he/she will then have complete rights to the funds in the account
- Uniform Transfers to Minors Account – extension of Trust Gifts to Minors that allows items other than cash or securities to be considered gifts
- College Savings Plans – prepayment of qualified higher education expenses at eligible educational institutions
- U.S. Savings Bonds – fixed rate of interest over a fixed period of time which are not subject to state or local income taxes
- Life Insurance – contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person
- Tax Free Payment of Tuition and Medical Expenses – direct payments for someone’s educational or medical expenses are exempt from the federal gift tax, without regard to the annual exclusion limitation
The next time you feel like showering your grandchildren with gifts, consider making a long-term gift that will help provide financial security in the future. If you would like to discuss any of these options in greater detail, a good place to start is your trusted financial advisor or banking institution.
Finemark National Bank & Trust has an office on The Island at Shell Point Retirement Community. If you have questions about this article, contact us by phone at (239) 461-5999.