Clay and Betty are recently married; it is his fourth marriage and her second marriage. She has
Question:
Clay and Betty are recently married; it is his fourth marriage and her second marriage. She has one son (Gabe) and no grandchildren, but she loves to volunteer in the pediatric ward at their local hospital. Betty will tell you that those children are "all her babies." He has children with each of his three former wives some he is in contact with, others he is not and nine grandchildren in total. He wants to help with funding a portion of the education for each of his grandchildren. The oldest grandchild is 16 and the youngest is 3.
Clay is recently retired after a very successful career as a pharmaceutical executive and is well-off financially. He is paying alimony to each of his ex-wives. The last of his child support payments will be made next year when his oldest child, Kelsie, turns 18 and graduates from high school. He paid off his mortgage prior to retiring and has no other debt. Clay and Betty like to travel, and budget $5,000 annually for trips abroad.
Clay has come to you for help because he would like to make one-time gifts to fund a portion of each grandchild's education. It is important to Clay that he treats each of his grandchildren equitably, regardless of his relationship with their parents. He wants to understand any tax implications of his gifts and wants your recommendation for how the funds should be invested:
1) Describe the factors that will influence how much Clay gifts to each grandchild?
2) Identify the type of account(s) you would recommend that Clay open for each grandchild's education savings and explain why?
3) Explain how the age range of the grandchildren will affect your investment recommendations?
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett