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SENIOR ADVOCATE

By Liza Horvath

 

A gift to your grandchild

 

When our granddaughter, Emma, was born, my husband and I decided that rather than adding to the piles of gifts she would undoubtedly be receiving for birthdays and holidays, we would set up an investment account and add to it on each such “occasion.” With a starting gift of $2,000 and additions of about $500 each year, at an average return of 6 percent, she should have almost $28,000 in the account at age 21. That amount could help pay educational expenses or provide a good down payment for a car. If she waits to raid the account until age 30, she would have over $53,000. With her parents understanding that toys and such would not be forthcoming, we believe Emma will appreciate the gift. What gifts would be meaningful to your grandchild?

 

A simple investment account is great but how about a 529 college savings plan? These plans are state specific so educate yourself on benefits and limitations. Contributions to a 529 plan are generally tax deductible and the funds grow tax free – increasing the effects of compounding interest. With certain exceptions, if funds are used for qualified higher education expenses, withdrawals are also free from income taxation.

 

If you have a disabled grandchild, states are now allowed to set up programs called 529A plans, known as Achieving a Better Life Experience or ABLE. The accounts allow funds to be set aside in tax advantaged plans for the disabled and the account will not disqualify disabled persons from receiving Social Security disability benefits.

 

Money is not the only way to give a special gift to a grandchild – think bigger! There is no debate that umbilical cord blood is rich in stem cells that can be used to treat and cure, should your grandchild become sick later in life. Stored umbilical blood can also be useful for a sick sibling or relative but many young parents cannot afford the cost of setting up an account with one of the some 20 private cord banks in the U.S. Grandparents, however, may find the cost justifiable. Establishing an account runs about $1,800 with an average annual cost to maintain the account of approximately $100. If you consider the “account” as insurance that lifesaving cells will be available if needed, it becomes crystal clear that it is a worthwhile investment.

 

On a similar note, if you are under age 60, consider signing up with a bone marrow transplant registry. Hopefully your grandchild will not need your marrow, but according to Bethematch.org, an established bone marrow registry in the U.S., every three minutes someone is diagnosed with a blood cancer like leukemia. For many, the only hope for a cure is a bone marrow transplant and patients are more likely to match someone from their own ancestry. If we all register, our marrow may help someone today and hopefully, if ever needed, a donor would be available for our child or grandchild. Registering is easy and the sample is painlessly collected by swabbing the inside of your cheek.

 

Finally, we have life stories and our grandchildren can benefit from them. Write a journal and remember it does not need to be anything formal. Just jot a note here or there about a happy memory, record a favorite quote, write about a book you read and what it meant to you, or comment on the day’s news. Share your values, insights and educational experiences – it will create an invaluable gift for your grandchild.

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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