3 Reasons How You can Benefit from Planning to Gift Money

Hoteliers I know ask me "Why should I incorporate a plan for gifting in my financial affairs?" They are right! Instead, all the money could be spend on oneself in the lifetime.

But researches draw the other picture. A third of young adults aged 18 to 34 and families with young children are struggling financially, especially to pay day to day expenses like housing costs, childcare, utility bills, et cetera.

One striking aspect of this is the extent to which grandparents and parents are stepping in with thousands of dollars to help grandchildren and children with their daily expenses every day.

The real challenge is, would you be able to look so far for such possible needs? True, but it's refreshing when you know that planning to gift benefits you personally right from day 1. Read on.

It is just a matter of time to realize in the process of wealth creation earning money is just one part of it. As personal wealth matures it takes its own course corrections, developments and gets to have its own demand and supply needs. For instance, most of the times wealth demands to be transferred itself into form of education. This is one way wealth can be multiplied manyfold by converting this knowledge and information into a successful revenue model in the future. This fact forms a very foundation of gifting children or grand children college funds, and is a favorite form of transferring wealth.

Few other reasons gifted money have helped next generation is as a support for mortgage deposits, buying businesses, or simply to keep as an inheritance.

How planning to gift money is going to be a boon for you today?

Here are the three good reasons why and how planning to gift will work in your favor. Not to mention the emotional satisfaction of preparing to give.

?1. Save on Inheritance Tax.?

Depending upon country to country, you may be liable to up to 40% inheritance tax. That means if your children have to inherit your assets in any form, they need to have cash of about 40% worth of the asset ready with them to pay to the government. Planning these funds under ring fenced environment provides immunity of tax efficiency of trust and tax free financial jurisdictions.

2. Planned funds get to be placed on investment instruments.?

Invested funds enables you to maximize the size of the gift money. Planners, especially early planners, get to capture majority of the market growth by staying in the market for a longer period of time, thereby compounding the funds. So, investing can save you money by being able to pass more than possible by cash.

You get a variety of investment options which can be assessed and selected based on your risk appetite and investment goals.

That means if you are able to gift a 100 on your own, with the help of planning you may be able to give 120 or 140 after the inflation. Your return of investment ROI is based on how early you started to plan.?

ROI from your life insurance can be anywhere between 30-70% based on your age and health

You may also plan the gift in the form of life insurance where your ROI on those investments can be from 30-70% based on your age and health.

Life and critical illness cash benefit policies can be gifted to children as well. Helping kids prevent financial losses in the future is as good as gifting them the same value. ROI on kids protection policies can be anywhere between 70-85%.

3. Provisions for Safety and security.

Now that your funds are planned and invested, these assets are brought under a trust and stringent regulatory frameworks. For those who want more control over how money is spent, setting up a trust can help ensure any investment is used appropriately. There are a wide variety of trusts that can be used to meet individual requirements.

All the contracts from a reputed financial institution comes along with a built-in trust.

This arrangement allows you to name a beneficiary and protect the assets from creditors, taxes and default risks.

Your next steps would to get your financials organized, create a financial road-map and look for areas of weaknesses and figure a way out and work on the feasibilities for potentials fixes. Your independent financial planner would be able to help you through out.

After all, the funds you have planned to gift is yours until you decide to gift it. Until then your money will work for you. It can support you as a passive income or a pension per se.