As children and family members return home for the holidays, discussions around the table may turn to family finances.
Consider reminding parents that having everyone together at holiday gatherings can be a good time to address some key planning topics around areas such as legal documents, wealth transfer, education funding, and charitable giving.
With that in mind, here are several ways advisors may reach out to families over the holidays.
Planning for family members
- Are key documents up to date, including wills, health care proxies, and health directives? Signatures will typically be required on many of these legal documents, and there may be notarization needed as well
- Review beneficiary information to make sure documents are up to date with changes in family situations
- Parents may want to finalize a health care proxy for college students home from break, if they haven’t already done so, before they head back to school. The Family Education Rights Privacy Act prevents a college or university from sharing student information with others. Students will need to give permission to allow their parents to view statements online. Read more about these key documents for college students in our blog
- Check in with older parents to see if they have a "road map" in place for family members that outlines their wishes, a list of account details, and passwords in the event of a family emergency
- Consider funding a Roth IRA for younger family members to jumpstart a long-term savings program
- With the rising costs of long-term care, consider funding health savings accounts (HSAs) for those with high-deductible health plans
Gifting considerations at year-end
- Holiday giving may also include funding the gift of higher education with a 529 college savings plan
- Parents or grandparents may want to learn more about the tax advantages of a 529 college savings plan including how they could donate five years’ worth of contributions in one year
- Discuss gifting appreciated or income-producing assets to family members in low tax brackets
Family charitable account
Philanthropic discussions often bring families together. Parents may want to consider establishing a family charitable account using a donor-advised fund. They may engage other family members in deciding where annual grants should be distributed. This can also be an opportunity to teach grandchildren or other family members about the importance of philanthropy. Young family members may welcome getting involved in causes that are important to them.
With the range of funding alternatives and strategies, it’s important for donors to understand their options. A well-crafted approach can help optimize benefits for the non-profit organization receiving the gift while providing valuable tax benefits to the donor. For a detailed comparison of charitable giving options, explore our investor education piece, “Understanding charitable giving strategies.”
Find time to seek advice
The holidays are always a busy time. Suggest a family meeting where parents could discuss some of these ideas. It could be structured around something as fun as a social event or sharing a meal, or perhaps a Zoom call with an advisor to lead the discussion.
For informational purposes only. Not an investment recommendation.
This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions. Putnam does not provide tax or legal advice.