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How Families Get Financially Stronger

By Portage County Business Council

By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

Over the years, I’ve had many conversations with people about what they want to give to their kids and grandkids.  Some people are not compelled to help their kids once they reach adulthood while others are.  Of those who are, many choose to give to their kids and grandkids throughout their lifetimes so that the gifts can be either directed by the parents/grandparents and/or made use of while their family members are young and building their lives.  Gifting strategies can be tied to your personal values so that the money is used wisely and leveraged to empower their lives rather than entitle their attitudes.  A common strategy is to fund education accounts.  You may also consider putting money into retirement accounts once the child has earned income.  ROTH IRAs can be powerful tax-favored compounding tools, especially when given ample amounts of time for the investments to appreciate (start young!).  A person early in their working years usually is dedicating their earnings to pay bills and get started in life.  If you see your children or grandchildren working hard, you may consider adding money to a ROTH IRA for them.  In 2019 you may contribute up to $6,000 or the amount of their earned income for the year, whichever is the lesser amount.  As the young earner progresses, contributions could be in the form of a match to incent the discipline of saving for retirement.

Life insurance can also be a powerful tool leveraging premium dollars into a much greater death benefit.  The caveat is, we never know if the death benefit will pay out tomorrow or years from now.  Commonly, a married couple may have life insurance policies insuring each spouse with the primary beneficiary being each other and contingent beneficiaries as children.  When the kids are young and dependent on parents, the entire death benefit can be needed by the surviving spouse to replace the income of the deceased.  If and when there becomes “wiggle room” financially, you may consider including your children as partial primary beneficiaries.  For parents who definitely want to help their kids,  concerns may be that if one passes away many years before the second spouse passes on, a few things could come into play: 1)  it could otherwise be decades before the kids receive any inherited money from the parents, 2) new blended family members could come into the picture if the surviving spouse marries again.  If, upon the second marriage, there was not will or trust drafted to include children from the original marriage, all assets upon death could be left to the second spouse and the children of the original couple could be left out,  3)  as a general rule, life insurance death benefit proceeds pass on income tax free, therefore complex gifting strategies to minimize or avoid taxes on other monies are not needed.  Estate planning instructions may include that if the children are under a certain age, the inherited money would be placed in a trust account until a more mature age (and therefore mindset) is reached.

In a recent conversation discussing strategic plans to contribute to the lives of their children, a couple I met with said it best:  this is how families get (financially) stronger.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.