In twenty-two countries around the world, a special day is designated to recognize and to celebrate grandparents. In America that day is the first Sunday after Labor Day. Creating a family and a lasting legacy is a tremendous achievement, and every grandparent should feel as grand as the title.

Helping you reach your goals, one investment at a time.

From The American Presidency Project, Proclamation 4580—National Grandparents Day, 1978:

“The elders of each family have the responsibility for setting the moral tone for the family and for passing on the traditional values of our Nation to their children and grandchildren. They bore the hardships and made the sacrifices that produced much of the progress and comfort we enjoy today. It is appropriate, therefore, that as individuals and as a nation, that we salute our grandparents for their contribution to our lives.”

That contribution may extend to an encore of parenting, being the primary caregiver for grandchildren. According to the U.S. Census post about this year’s National Grandparents Day, about 1.30 Million grandparents in the labor force are responsible for most of the basic care of coresident grandchildren under age 18. Another 1.03 million are able to assume this responsibility while out of the labor force.

This dynamic can work to the grandparents’ benefit as well. These relationships can help turn senior years into the golden years of one’s life. Most grandparents feel that their relationship with their grandchildren nourishes their mental, social, and physical well-being. Most agree that having grandchildren has significant, positive health benefits for them, such as making them more sociable and physically active. The positive impact of grandchildren on grandparents highlights the importance of interaction, engagement, communication, and shared activities between these two generations of family.

Break the ice

One of the great things about grandparents is they have experiences to share, and often the time to share it. However, it can sometimes be awkward to bridge the gap, to get grandparents to tell those stories, when they do not know what their grandchildren would be interested in. Here are some questions grandchildren might consider asking this grandparents day or stories grandparents might consider sharing:

  • What is your favorite childhood memory?
  • What was your favorite job you have ever had? What was the worst?
  • How did you and your spouse meet?
  • What are you most proud of? Did you ever participate in any charitable work?
  • Can you tell me some stories about my parents when they were younger?
Going above and beyond

An affluent grandparent may want to consider a more formal program of financial support for the grandchildren, or the family in general.

  • 529 plans offer a tax-advantaged savings strategy for higher education. There is no deduction for contributions, but income tax is deferred on investment earnings, and there is no tax on withdrawals used for qualified education expenses.
  • Gifts of stock or mutual fund shares may productively introduce the idea of investment management to the younger generation. There could be an interesting story behind the purchase or holding of the shares, a story to lift the idea of portfolio management into something vivid, even exciting. When a grandparent has owned shares of stock for many years, the tax basis is likely to be low. Shares of gifted stock carry their tax basis forward. Where the grandparent might have incurred significant capital gain taxes upon a sale, the grandchild is likely to be in a lower tax bracket, even at a 0% tax rate on gains.
  • Trust plans to support family values. Philanthropy may come into play, and the entire family could be involved in selecting suitable charitable beneficiaries. Or a trust could be focused on enabling family experiences, such as group travel or vacations, which otherwise might not be possible.

We at Arvest hope you have a wonderful Grandparents Day. If you are considering substantial gifting strategies to grandkids, please reach out to one of our Client Advisors so we can help facilitate your goals.

This content has been prepared by The Merrill Anderson Company and is intended as a general guideline.

© 2022 M.A. Co. All rights reserved.