Whether your family celebrates Christmas, Hanukkah, Kwanzaa, or you simply enjoy the festivities of winter, the best gifts for your children and grandchildren are never those found in stores. You want to impart a personal touch, something that will set them on the right course in life and allow them to reach their dreams. You may be surprised, but more and more parents and grandparents are turning to one of the most adaptable tools of estate planning to do this: by establishing a Wealth Creation Trust, you provide your children or grandchildren with a tremendous gift of security, resources, and opportunity.
Did your relatives ever skip the present and simply put cash in your pocket? Particularly at the holidays, a monetary gift is commonplace in many families.
Of course, this usually takes the form of a check written to the parents or it goes into a custodial account at the bank. When choosing this route, few are aware of the potential consequences:
- Sad, but true. The frequency with which parents put their children’s gift money into their own pockets is higher than most of us would like to think. Though sometimes the family may truly need the money, the child never sees a dime of it in many cases regardless.
- Squandered future. Custodial accounts are often used to delay the child’s access to their money until they are 18 or 21 in the hope that they use will be more measured and mature. But really, how likely were you to make truly good use of a financial windfall at that age? There’s little to stop your money going to pay for a flashy car and a party trip to Vegas. You don’t want to see your child’s future squandered.
- College blues. The modern era of sky-high tuition costs makes helping out your college-bound grandchild hard to resist. However, that helping hand is counted against them when they are considered for financial aid–effectively cancelling out your assistance in the long-run!
- Marital blunders. Marriages don’t always work out. If your gift goes into a commingled account, a divorce or even a high-rolling spouse may put it to their own use.
It doesn’t need to be this way and there are alternatives–alternatives that are good for you, good for your child, good for all those eager gift-givers, and even good for the world!
With the holiday gift giving season coming up, now is the perfect time to set up a Wealth Creation Trust for your child or grandchild. Make sure that your family knows that any monetary gift going forward should be made out to “the Trustee of the [Child’s Name] Wealth Creation Trust.
Upon reaching the specified age, the child will step up to become a Co-Trustee of the Trust, enabling them to learn how their trust operates and how best to utilize its funds. They can be trained on investment priorities (self-care first and foremost, followed by well-being programs and entrepreneurial training, and even any entrepreneurial activity the child has taken up). Doing so will do more than any toy or spending money–not only does he or she have the opportunity to better themselves, but leave their positive mark on their world, as well.
Among the things your child will learn as co-Trustee are:
- The purpose of a Trust — the encouragement of wealth creation from one generation to the next.
- The protection of a Trust — particularly the proper titling of investments and signing on behalf of the trust.
- The creation of future wealth.
For 2014, you can give a gift up to $14,000 per person without the need to file a gift tax return. By putting it in a Wealth Creation Trust, the gift you created this holiday season becomes not just a vehicle of financial security, but education and impact for a lifetime and beyond.
If you would like to learn more about how to establish a Wealth Creation Trust to secure the financial future of your children, grandchildren and beyond while encouraging and educating them to create more wealth in the world (rather than squandering what you’ve worked so hard to create), contact our office for a Family Wealth Planning Session at 612-206-3701 or send us a message with our online contact form.
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