Financial Planning Strategies for Grandparents, Ep #145

With Grandparents day around the corner, this week we’re breaking down helpful financial planning strategies for grandparents.

Many grandparents have dreams of sharing the fruits of their labor with their families. However, sharing your wealth effectively takes careful planning.

Listen to this episode to hear the best ways to plan effectively for your kids and grandkids.

Vacationing Confidently

Grandparents love spoiling the grandkids. One of the more memorable ways to do this, is by taking care of planning and paying for the whole family to take a bucket list vacation. After working and saving for years, retirement brings an excellent opportunity for grandparents to take everyone on this epic family trip.

These conversations often lead to considerations of what similar trips could look like over multiple years. When you begin to determine the desired scope and frequency of your traveling lifestyle throughout retirement. Will your trips be one-time events or an annual traditions? Will they be large one-off trips or multiple smaller trips throughout the year?

This is where financial planning can provide priceless perspective to help you make the most of your traveling memories.

Share the wealth

Another common planning strategy many grandparents consider is direct gifting to their children and grandchildren. In 2021, the gift tax exemption is $15,000 per person [$30,000 per couple] before you’d need a gift tax return. This provides a more meaningful way for grandparents to enjoy seeing their children and grandchildren benefit from their hard work vs. waiting to inherit monies after they were to pass.

Some grandparents have specific desires to help pay for their grandkids education. To accomplish this, many choose to contribute to their 529 plan or even start one of your own with the grandchild as the beneficiary. 529 plans create more flexibility when handling education expenses. We broke down 7 ways you could use a 529 plan in a recent article here.  Have you thought about ways you’d want to contribute to your grandkids’ education?

Leave your affairs in order

Too many people put off their basic estate planning documents in place. Before planning anything else, make sure that you have a will, power of attorney, and healthcare power of attorney.

Once you have the basics in place then you can think more strategically about specific ways you can plan your estate.

One way to directly leave your wealth to those you love is by naming them as beneficiaries on your accounts. It’s important to remember that named beneficiaries supersede your will, so check your beneficiaries periodically to assure they still align with your wishes. Listen in to hear about trusts, per stirpes, and whether it’s better to give cash or appreciated stocks.

Common misconceptions to avoid

There is a common misconception that you can plan for a long-term care event by giving away your assets and waiting 5 years to be eligible for Medicaid. What many people don’t realize is that your household income could disqualify you from Medicaid. To qualify for Medicaid care, a single person’s household income must be less than $17,131 per year in NC [$23,169 for a couple] and most people’s Social Security benefits would be higher than that.

Listen in to hear how important it is to create a plan to put in place and communicate your wishes to your family.

Outline of This Episode

  • [2:09] Family travel is one way to show your love
  • [3:39] How to share your wealth with your family
  • [6:30] Get your affairs in order
  • [10:35] Common misconceptions to avoid
  • [14:44] The progress principles

Resources & People Mentioned

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