Your family means the world to you. You want your children and grandchildren to be financially protected, so they have the opportunity to enjoy life, live comfortably and worry less. As a fiduciary, financial advisor, I’ve helped clients’ open traditional brokerage accounts in their own names, and we’ve earmarked the money for their child (or grandchild). This lets my clients’ access their money while their child is still a minor and keep control of it after their child reaches adulthood. Then, when they feel their adult child is ready for it, they can transfer the account to an account in their child’s name. Or they could make their child the beneficiary of the account if they die or become incapacitated. With greater adult control comes higher taxes, though. They are taxed on any earnings at their current tax rate, rather than at your child’s. They will also need to keep in mind gift tax rules when deciding to turn over the account funds to their child, meaning it may not make sense to transfer all of the account’s assets at once. Life Insurance on a Child? After 22 years in this industry, I have heard the many pros and cons on buying a life policy on kids. I sincerely do not have a ‘horse in the race’. As a fiduciary, I am an investment advisor, but I do have extensive experience with insurance planning, as well. Without question, I am always going to do what is in my client’s best interests. And like every other financial product out there, it all depends on your unique circumstances. I would tell parents, first, assess your household budget. Then, take a strong, objective look at your own life insurance needs before buying a policy for your kids. Because, in general, your own life insurance is more important than your child’s. But if you’ve got it covered (human life value ‘covered’, that is), then there are some real benefits to child life insurance policies. Advantages such as, guaranteed insurability, and a cash value life policy acting as a supplemental savings vehicle for your child. And lastly, which we hope and pray, we will never need, is to cover costs if the worst were to happen. On a positive note, you can help your children or grandchildren preserve their ‘insurability’ by putting life insurance in place while they are young. When we are younger, many of us think we’re invincible. Take it from me (after a life-altering spinal cord injury at age 39) we are not! Whatever route you decide to take to give your children or grandchildren an early start down the path of financial security, either financial solution will almost certainly be better than not doing anything at all. Whether it is a traditional brokerage account, or a cash value life insurance policy, it opens up opportunities for helping pay for college, buying a new home or supplementing their retirement down the road. In my estimation, that’s a gift of a lifetime. Email me at garrett.wheeler@securitiesamerica.com for a free PDF resource brochure from Securian called, Gift of a Lifetime. Aloha! -GW SEA Financial Hawaii does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. SEA Financial Hawaii cannot guarantee that the information herein is accurate, complete, or timely. SEA Financial Hawaii makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.