If your child is still a few years away from buying a home, you both have time to plan ahead. To encourage your child to save as much as possible now, can minimize how much you need to help him in the future. The fact that he automatically pays part of his paycheck into a separate savings account is a good way to start. Perhaps you should even consider matching your contributions to increase your savings. (Be sure to take into account the restrictions on gifts discussed above.) If he is still a few years away from buying a home, he might consider investing in a low-money, balanced investment fund that would invest in a diversified mix of stocks and bonds. If your child is only a year or two away from buying a home, money and short-term bond funds are a safer option. Most children do not understand how much of a bad obstacle credit can be on the mortgage application process. Make sure your child understands that he or she must have a history of several years of late payments, multiple sources of credit and both renewable (e.g. B credit card) and installment debts (for example. B auto credit) that must be dealt with appropriately before the discussion about home ownership begins.
Although it seems that only money should be easy to spend, great gifts can create their own problems for the wealthy. Under the current law (2017), a person can give up to $5.45 million to others in his or her lifetime without triggering federal inheritance tax or gift requirements. For a couple, that figure doubles to $10.9 million. So the money given to your children in the form of a down payment or mortgage assistance could reduce what you could put into a trust, or they could inherit tax-free. Clarification also helps in the event of a divorce, especially if you intend to make the gift for your child and not for his or her spouse as well. «If the couple ends up getting divorced and it`s not clear in writing,» McPherson said, «then the future ex-spouse will benefit, which usually doesn`t fit his in-laws well.» It goes without saying that with a lawyer, you should write a legal document and spell everything. This not only strengthens the agreement between the parents and the child, but clarifies things legally and prevents future arguments if you have other children or you pass and you have to find your estate.