Working toward freedom, genetic continuity, and economic nationalism.
Many grandparents want to provide a financial cushion for theirgrandchildren in the future. Bobbie Abrams, 76, has a more pressingconcern: helping them with current expenses.
Ms. Abrams, whose grandparents were Russian immigrants who foundedthe Hudson Pulp and Paper Corporation, has six grandchildren, ages 12to 27. After one of her sons died of cancer 19 years ago, leaving twoyoung children, and her daughter, Carolyn Abrams-Dyer, was suddenlywidowed in 1997 while pregnant with her third child, Ms. Abrams usedfamily money to pay for private school, college and graduate schooltuition, orthodontia, summer camp and more.
Getting herchildren and grandchildren “on their feet” is her highest priority,even if it leaves less for their inheritance, said Ms. Abrams, aManhattan philanthropist, whose husband Warren died in 1994.
Since the economic downturn, other grandparents have reached thesame conclusion and are helping adult children who have sufferedfinancial setbacks.
But tax traps await the unwary. Beinggenerous can subject you to gift tax of up to 45 percent if you exceedcertain limits. There is also a generation-skipping transfer tax of 45percent on the amount of a grandparent’s gift to grandchildren thatexceeds $3.5 million.
Yet there are simple ways, a number ofwhich Ms. Abrams has employed, for grandparents to pick up some of thebiggest expenses without incurring tax.