Sand Hill's Chief Investment Officer, Brenda Vingiello, CFA, joins Jenny Harrington on “Halftime Report” to go over their most recent portfolio moves. Brenda's commentary begins
Love Hurts
Published Date : September 9, 2015
I can now fully understand from firsthand experience what it means to want the very best for your child. As the mother of a 2½-yearold, I am fortunate in that it is still relatively easy to meet all of my daughter’s needs and to make her happy. While raising children in Silicon Valley — or anywhere for that matter — is an expensive proposition, I am happy to make the financial sacrifices I feel are important to her well-being. I am fortunate that this is also relatively painless as I have many working years ahead of me and I have not altered my retirement savings goals for her support. While it is expected that I will support my daughter throughout her childhood, what is becoming less clear is what happens when she reaches adulthood. Will I continue to provide financial support well into her twenties and beyond?
A growing number of parents these days are doing just that. A recent Pew research report revealed that 61% of Americans had provided financial support for their adult child in the preceding 12 months. While most of the parents (89% according to Pew) were happy about helping their kids, this support can intentionally or unintentionally jeopardize Mom or Dad’s best laid plans for retirement. If you are considering helping your kids or are already doing it, here are few things to consider:
- Duration: Will the support be a one-time boost up – the down payment on a first house, for example – or ongoing? With soaring home prices in the Bay Area, it may feel like helping your kids with a down payment on their first home is a given if they’re settling down here. And if you are able to afford it, that is indeed a wonderful gift. However, be sure that you aren’t setting your kids up for a lifestyle they can’t support without ongoing gifts from you. Soon enough that house will need a new roof.
- Purpose: While the majority of your financial assistance may be for rent, car insurance and cell phone bills, you may feel compelled to help your kids with bigger ticket items like medical expenses or graduate school tuition. If that is the case, be sure to make the payments directly to the provider and not to your child in order to avoid the annual exclusion gift limit. Remember that any gift over $14,000 per year, or $28,000 for a married couple, is considered a taxable gift in the eyes of the IRS. While you won’t likely pay any actual tax for gifts in excess of this amount, you will need to file a gift tax return and count it against your lifetime gift and estate tax exemption amount, which for 2015 is $5.43 million per person (Source: Forbes, October 30, 2014).
- Other Resources: Have you already established a Trust or UTMA (Uniform Transfers to Minors Act) account for your child that should be distributed to them? It may be that you’ve already set aside money for the child in need and just haven’t taken the steps to turn their account over to them. Perhaps you don’t even remember what age you should turn their funds over to them as it has always seemed far in the future. Now may be just the time to dust off the old trust document and think about having your kids use their own assets for their intended purpose. If you’re still working and using some of your earned income each year for supporting the kids, you may not feel compelled to wean them just yet. If this is the case, be sure that you are informed about the impact to your own financial future.
According to the Social Security Administration, the average 65-year old baby boomer can expect to live at least twenty more years. One in four will live past age 90. That will require significant assets in order to maintain pre-retirement spending levels. If you haven’t worked with your financial advisor to determine what you’ll need to keep your Golden Years truly golden, then now is the time.
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
Video Presentations
All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
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