By Glen D. Smith, CFP®, CRPC®
My family is my number one priority. With hard work, careful planning and a little luck I’ve provided security for Gisella and our kids. We all want to provide for ourselves and our children, but once they’ve flown the coop, how can we keep-on giving?
Here are some tips on sharing the love with your adult children.
Cold hard cash
My daughter is only 11 but one-day she’ll be all grown-up and driving her first car. While an occasional tank of gas will be nice, one-day I’ll just want to give Nathalia cold hard cash towards the insurance or maybe even a new car.
But there’s a limit to our generosity, and folk often fall foul of the IRS, when they gift too much money to their children. At Glen D. Smith & Associates, I can help you give to your kids and not the taxman!
Is loaning the new gifting?
Parental loans are great because you dictate the duration of the loan. It’s important to be transparent, so ensure there’s a legal contract, fixed repayment schedule and details reflecting the loan terms.
Consider a 20-year loan, which keeps repayments at a manageable level and by the time you retire, you can cancel the remaining debt. But remember, it’s OK to forgive the loan in the future, just don’t put it in writing!
Your family will always be your number one priority. There are hundreds of ways to share your wealth without leaving yourself short of cash or incurring the wrath of the taxman.
But it takes time to organize your finances and can be very stressful so let our team and I take that weight off your shoulders. Together, we’ll personally analyze all your finances. We’ll present all the different options, their pros and cons, and our recommendations so you can pick the best possible solution for your needs.
Glen D. Smith & Associates, Raymond James is located at 1029 Long Prairie Road, Suite C, Flower Mound, TX 75022. (469) 212-8072.
Glen D. Smith & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Any opinions are those of Glen D. Smith and not necessarily those of RJFS or Raymond James.
This case study is for illustrative purposes only. Individual cases will vary. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.
The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59½, may be subject to 10% federal tax penalty.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.