New York, NY, September 13, 2020 – Today is Grandparents Day. Steven B. Zelin, CPA, Managing Member of Zelin & Associates CPA LLC in New York City and The Singing CPA®, appreciates the value of giving children and grandchildren the gift of financial awareness.
Mr. Zelin talks about how people spend money. “Grandparents should strengthen the financial responsibility message given by parents to help grandchildren build healthy fiscal habits.” He proposes a match for dollars saved. If the grandchild saves $1, the grandparent could match those savings by $1.
“Each grandparent can give as much as $15,000 a year, gift-tax free to each child and grandchild,” says Mr. Zelin.
Mr. Zelin also suggests building healthy financial habits with an alternative to direct giving. “Funding one or more types of trusts can be customized to fit many financial and personal situations. An incentive trust, for example, could be instructed to distribute funds to your grandchildren in installments, at specified points in their lives, and may tie payouts to your grandchild’s accomplishments—reaching a certain income level, for example, or getting an associates degree or 4-year college or graduate degree.”
Other possible financial moves for grandparents include taking care of college by setting up a state-sponsored 529 college savings plan for your grandchild. ”Start early and kick in the annual gift-tax-free maximum, and your grandson or granddaughter should be in fine shape when tuition comes due,” says Mr. Zelin.
Money in 529 plans grows tax-free and withdrawals for qualified college expenses aren’t taxed, either. And, if you want to accelerate giving, you can make five years’ gifts—a maximum of $75,000—all at once. “If you didn’t get around to starting a 529,” Mr. Zelin adds, “Consider sending a tuition check directly to your grandchild’s college. It won’t count against your $15,000 annual gift-tax exemption!”
Mr. Zelin says, “There are several options for helping your grandchildren learn the value of charitable giving, and many of these vehicles also offer estate tax advantages. For example, you could transfer assets from your estate into your own family foundation. Your grandchildren could get involved by helping screen grant applications or serving on the foundation’s board. A less expensive alternative is a donor-advised fund, which also lets grandparents and grandchildren confer about which charities to support.”
Mr. Zelin appreciates the importance of family and cites the words in the official National Grandparents Day song from Johnny Prill…”Oh Grandma, Grandpa, you know that I love you. I love all those little things that you say and do. A walk through the park, a trip to the zoo. Oh Grandma, Grandpa I love you.”
Mr. Zelin may be reached directly for further information on this or other tax and personal finance questions at 646-678-4496 x101 or firstname.lastname@example.org