Can I give my kids some money?
I hear this question quite often from my clients. There are several answers to the question. Underlying it all is the normal parental need to be able to assist our family while they are juggling the usual expenses of home and children, from an income that doesn’t always stretch quite as far as they would like.
The first part of the question is – can I afford it, and your answer to that may be that you think you can.
The next part of the question is – are there consequences for me?
There may be – for instance if you receive a Centrelink age pension there is a limit as to how much you can gift to your children. The current limit is $10,000 per year up to a maximum of $30,000 over a three year period.
If you are a fully self-funded retiree the consequence could be that your ability to maintain your own lifestyle in retirement is compromised, so it is a question that needs careful thought. It is recommended that you seek advice from your advisor.
Is giving cash the best way to help?
It is debatable as to whether straight out cash gifts are really the best way to help – you can’t direct where the cash is spent, and it may not be put to its best use. What if we paid an essential expense instead? Examples might be to contribute to the grandchildren’s school fees or to pay the life insurance premium for your son or daughter?
Paying a life/TPD (total and permanent disablement) insurance premium for an adult child may mean the difference between them being properly insured, or having little or no life or TPD insurance. This not only protects your child and his/her family, but it protects you too, as you may be called upon for support should your child become ill or disabled.
I would like to start an investment for my child/grandchild
This is also an excellent way to give your family a helping hand as it is a long-term solution that will provide some passive income and capital growth in the future.
A small investment in the Capricorn Diversified Investment Fund, with distributions set to be reinvested, is one way you can achieve this, and it is even better if you add extra contributions from time to time. By the time the newest grandchild is old enough to attend university or wants to buy a car for example, there will be a tidy little nest egg they can draw from. You can view details of the Fund at http://cdif.com.au/ or you can contact Capricorn Investment Partners or the Pentad Group for information and assistance.
Want to learn more about helping out your children/ grandchildren? For your free initial consultation with one of our friendly advisers, call our office today, toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office. One of our advisers would be delighted to assist you.
Sue Dunne holds an Advanced Diploma of Financial Services (Financial Planning) and is an Associate Member of the Financial Planning Association. She specialises in financial analysis, investment advice and superannuation. Sue’s problem solving and strategy capabilities assist her in working with people of all ages to help them achieve their financial and other lifestyle objectives. Having worked in small business for over 25 years Sue’s business acumen combined with financial planning skills, make her a valuable asset to the Capricorn Investment Partners team. Sue has worked, lived and raised her family in a rural environment for most of her life. Sue works in our Rockhampton Office.
The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.