Lifetime Expense

General Expense Ideas

Each family member has standard expenses to address throughout their lifetime. Implementing creative solutions for general living expenses, can effectively increase benefits and wealth for a family over generations. Similar to cultivating assets, reducing and planning for these necessary lifetime liabilities has the potential to greatly improve lifestyle while further extending resources.

Earnings Match

To decrease the financial burden of living expenses of children, a parental match-funding arrangement can be used. After university graduation, a family trust could match their job earnings, either dollar-for-dollar or on a percentage basis, for a given number of years.

https://www.actec.org/estate-planning/motivating-heirs-incentive-trust-distributions/

A Trust Allowance

Leaving inheritance in a discretionary trust fund to be paid out over a family member's lifetime at the discretion of a trustee can cover some or all general lifestyle expenses. Assets can be protected from divorcing spouses and lawsuits if the trust is written properly. Bad decisions and outside influences can be avoided if a corporate trustee (such as a bank or trust company) is appointed to make the discretionary choices.

Investing for Another's Retirement

By investing small to medium amounts for a family member early in their life, the power of compound interest can be harnessed to effectively address that family member’s retirement needs, potentially relieving them of the burden of saving for their own retirement during working years. While many fail to start saving on their own behalf until much later in life, a significant advantage is gained if someone else saves on their behalf while young. The early start can allow an investment account the benefit of extra decades of growth and compounding, making a significant difference in the eventual balance. If the burden of saving for their own retirement is removed, the family member’s self-generated earnings can be applied to their general expenses.

https://www.nytimes.com/2022/06/10/business/kids-roth-ira-retirement.html

Vacations at a Shared Family Home

Purchasing new or maintain an existing vacation home can include the express purpose of family communal use, protecting it in a trust or otherwise as a shared family asset, potentially for generations. When structuring the ownership/decision structure, the holding costs can be considered, and the scale of the family vs the scale of the home. Low or no cost vacations can reduce general lifestyle expenses.

https://store.nolo.com/products/saving-the-family-cottage-cott.html

Renting a Shared Vacation Home

Renting vacation homes can have the express purpose of collective family use, potentially sharing the cost or purposefully sheltering other family members from vacation rental costs. Low or no cost vacations can reduce general lifestyle expenses.

Simply Giving Money Without Tax Concerns

The lifetime gift tax exemption allows the ability to give away money to family or friends (as many people as desired) up to $12.92MM (2023) without paying gift taxes. If married, a spouse can also give away the same amount for a total of $25MM+ under the 2023 lifetime gift tax exemption. Additionally, each spouse can also give away $17,000 annually (2023) under the annual gift tax exclusion for the sum of $34,000 together each year without reducing the lifetime gift tax exemption. This effectively means that millions in funds can be gifted as needed, without concerns about paying gift taxes.

https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes