In this week’s top reads personal finance section, we’ve chosen a theme of kids and money, with some tips about teaching them financial skills and making the most of financial gifts during one’s lifetime and after, via the estate. In the personal interest section, the articles are about hiring kids to work in a business and family business succession planning.
Janet Bodnar, author of Raising Money Smart Kids, has met with hundreds of parents throughout her career, and says that we often speak differently about money with our sons than with our daughters. She shares the many lessons she has learned when it comes to kids and shaping their minds about money. Included in her findings: when to start the conversation, addressing the gender gap, whether a grandparent should purchase stocks for a six year-old, the importance of building confidence, preparing resumes and practicing job interviews.
Bodnar also shares information about how Certified Financial Planner Anne Chernish approached the topic of money with her daughter, Sydney:
As Sydney grew, Anne encouraged her to write thank-you notes for cash gifts, earn money by doing small jobs and save money from her allowance. By the time Sydney was 10 or 12, she and her mom were talking about stocks.
To read the full article, click here.
It is becoming increasingly common for financial advisors to hear their clients say that they want to give money to their kids now, rather than when they die, so they can see their children enjoying their financial gifts. While this may seem like a kind gesture, certified Financial Planner Ashby Daniels is challenging the idea and offers up a new strategy.
Daniels says that our grown children tend to have many competing priorities, such as student loan (or any) debt and saving for retirement – these children will likely use a financial gift to pay down debt or add to their savings. He says that children who may have the propensity to spend money, rather than save it, will likely continue to simply spend your gift – perhaps not on anything special or lasting. Neither scenario equates to us really getting to watch our children enjoy that gift to its full extent.
Whether your child is prudent or a spendthrift, I think you’ll experience more joy by giving them a reason to travel or do things. And in most cases, I’d encourage you to be part of the adventure.
For Daniels’ full article, click here.
When creating an estate plan, most people will split their estate evenly among their offspring. However, in doing so our heirs may face unintentional consequences. In this article, Certified Financial Planner Brian Vnack reminds us that our children (or beneficiaries) often fall in different tax brackets. So:
1. Your beneficiaries don’t actually end up receiving equal amounts, and
2. More taxes are paid than necessary.
Vnak shares how we can plan for this difference and reduce the amount of tax our beneficiaries will have to pay. He runs us through the tax basics of inherited assets, the hidden cost of equally dividing your assets, a scenario to provide an example and crunch some real numbers, and how to transform unequal to equitable. Read the full article here.
Many companies that have grown to become multibillion-dollar empires, such as Samsung, Nordstrom and Walmart, are family run businesses. Senior lecturer, John Davis, who specializes in family enterprises, says that generational transitions can make companies susceptible to failure if proper planning is not in place. In this article, Dylan Walsh has compiled a list of Davis’ key guidelines for maintaining success over the long term – guidelines he has spent teaching for over four decades!
Read the full article to find out how you can plan for long term success within your family business through the generations.
If you own a business and have working-age children, there are several benefits to hiring them (aside from the obvious benefit of getting to spend time together and teaching your child about your business). The kind of benefits Amy Northard is talking about are the taxable benefits that you may not be aware of!
As a business owner, you’ve likely heard of the Tax Cuts and Jobs Act, which eliminated several tax benefits that you could previously benefit from. Hiring your child as a small business owner can help to offset the loss of those benefits.
You can shelter yourself from paying most—if not all—taxes on the wages you’re paying your children if your business is either a 1) sole proprietorship, 2) a partnership where both partners are spouses, or 3) an LLC that has elected to be treated as either #1 or #2.
To find out about all of the tax benefits you should be taking advantage of, click here.