Having a grandchild is one of the most precious and emotional moments in a person’s life. Moreover, grandparents are very lucky to be able to see the third generation of their blood lineage.
Therefore, you naturally desire to do everything in your power and capacity to ensure that your grandchild gets the best of everything.
If you are also a grandparent who wishes to ensure the financial security of their grandchildren, then this article will walk you through some of the best alternatives to do so. Keep scrolling down to read more about the top six ways you can plan your grandkid’s financial future.
Six ways to plan for your grandchild’s financial future
There are several financial tools and viable options to enhance your grandchildren’s future financial security. Find out the appropriate paths to help the new generation gain a hassle-free life by using your legacy from the following means.
1. A Whole Life Insurance Plan
When it comes to planning the financial future for your grandson, you must narrow it down to something that proves to be an asset in terms of finances and tax benefits.
One alternative to these options is a whole life insurance plan like child plan ™.
Child Plan ™ gives grandparents peace of mind since there will be no worries about their grandchild not being taken care of when they are not around anymore.
Child Plan ™ is tax-free, so your grandchild may enjoy annual dividends without worrying about losing money on taxes with each year that passes.
2. Registered Education Savings Plan
Registered Education Savings Plan (RESP) is a government-backed investment vehicle that allows parents and grandparents to invest money in their children’s or grandchildren’s future.
An RESP can be opened by a person, family, corporation or trust. The government provides incentives to encourage saving for the education of one’s children who are Canadian citizens or permanent residents under age 18.
The government will match your contributions to an RESP account. You can contribute up to $50,000 per child per year. The government will match your contributions with a 20% grant of up to $2,500 annually.
Grants are paid into the RESP when the beneficiary turns 17 years of age or after they graduate from secondary school, whichever is later.
3. Savings Account
Opening a savings account is a way to give cash gifts to your grandchildren.
You can open an account for a newborn or young grandchild as well. In this case, you hold the custody or appoint a custodian to supervise the administration of the account until your grandchildren reach the appropriate age to get hold of the fund.
However, these amounts are not reclaimable. Besides, they might reduce the amount of financial aid that your grandchild might receive.
4. Setting up trusts
Trusts are another way to transfer financial aid to the next generation. You or your appointed custodian holds control of these trusts until your grandkids reach a specified age. This person will decide how the funds are used.
But, trusts also have the potential to limit the possibility of your grandchild’s receipt of any financial aid. Besides, any unrestricted allowance may lead the kid astray in their financial decisions.
5. Make them beneficiaries
You can always name your grandchildren as beneficiaries when it comes to your will or your life insurance plans. You can set up or update your will to transfer and spread your fortune to the third generation. However, before you move ahead in both respects, always ponder how this will impact the beneficiaries.
6. Set a financial challenge
This is an indirect way to boost your grandchildren’s financial security. Give your grandchild an adequate allowance and challenge them to utilize it to have further financial gains and prosper.
If your grandchild is young, it might naturally motivate them. The desire to show you how they utilize the money positively will further lead them to financial gains, if not financial freedom.
The Joys of Grandchildren
The unbounded joy of having a grandchild comes hand in hand with a strong desire to do the best for these tiny bearers of hope.
When you step ahead with this desire, it is necessary to consider that all the ways mentioned earlier are unique with their advantages and limitations. Hence, it is always wise to keep a reasonable proportion between the needs of your grandchildren and your wish to gift.
There are many options out there for financial planning for your grandchildren including Child Plan ™ Participating Whole Life Insurance plan.