Planning for a Child’s Future with Fortunium Wealth Management

Ensuring financial stability for children and grandchildren requires careful planning. Fortunium Wealth Management assists families in exploring various education and wealth-building strategies to create a financial structure that supports a child’s future. Several investment and savings options can be considered to cover education expenses, provide financial flexibility, and build generational wealth.

• How It Works: A 529 plan is a tax-advantaged education savings account designed for college and K-12 tuition expenses. Contributions grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses such as tuition, books, and room and board.
• Who It Helps: Parents and grandparents looking to set aside funds specifically for a child’s future education.
• Considerations: Contributions are subject to limits, and funds must be used for educational purposes to receive full tax benefits.
• 
  

• How It Works: A Coverdell ESA is another education savings account that allows for tax-free withdrawals when used for education-related expenses. It offers more flexibility than a 529 plan, as funds can be used for K-12 and college expenses.
• Who It Helps: Families wanting a broader range of education expenses covered, including private school tuition before college.
• Considerations: Contribution limits are lower compared to 529 plans, and income restrictions apply to eligibility.

• How It Works: An IUL policy provides life insurance protection while also accumulating cash value, which can be accessed for various financial needs. Funds inside the policy grow based on the performance of an external index, without direct exposure to market risk.
• Who It Helps: Families looking for a long-term financial tool that offers both protection and potential cash accumulation for future needs, including education, home purchases, or business ventures.
• Considerations: Unlike dedicated education accounts, IUL policies are not restricted to education expenses, allowing greater financial flexibility. However, policy costs and structure should be carefully considered.

What Are UTMA and UGMA?
UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gifts to Minors Act) are custodial accounts that allow adults to transfer assets to minors without the need for a trust. The custodian (usually a parent or guardian) manages the account until the child reaches adulthood.

Key Differences:

• Types of Assets: UGMA accounts hold financial assets like cash, stocks, and bonds. UTMA accounts can include these plus real estate, art, and other property.
• Age of Termination: UGMA typically transfers to the child at age 18, while UTMA can extend to 21 (or later in some states).

How Can They Help Your Child?

1. Savings for the Future – Funds can be used for education, first home purchases, or other expenses.
2. Tax Benefits – The first portion of investment income may be taxed at a lower rate.
3. No Restrictions on Use – Unlike 529 plans, funds are not limited to education expenses.

Considerations:

• Once transferred, assets belong to the child.
• May impact financial aid eligibility.

Understanding these accounts can help you plan effectively for your child's future financial needs.

• Assess Financial Goals: Determine how much to save and what type of account best fits the family’s education and financial needs.
• Select the Right Plan: Compare different options such as 529 plans, Coverdell ESAs, or IUL policies based on flexibility, tax treatment, and long-term goals.
• Set Up Contributions: Open an account and begin making contributions based on budget and savings goals. Many plans allow automatic deposits for consistent funding.
• Monitor and Adjust: Review savings progress regularly to ensure the plan aligns with changing financial needs and education costs.

Fortunium Wealth Management works with families to review financial goals and select savings options that fit their specific needs, providing a structured approach to planning for a child’s or grandchild’s future.