By: Kyle Hurley, Private Wealth Advisor at Munroe Morrow Wealth Management

 

Financial support for your children requires structure and discipline. The objective is to build independence while protecting your own long-term security. We prioritize a few key tools that strengthen independence and set children up for long-term success without creating dependency.

 

529 Accounts

The gold standard for education savings. They are tax-efficient and surprisingly flexible.

  • Tax Benefits: Contributions grow tax-free, and withdrawals are tax-free when used for qualified education expenses (including trade schools). While there is no federal tax deduction for contributions, many states offer their own deductions.
  • Flexibility: You can use up to $20,000 per year for private K-12 tuition or a lifetime limit of $10,000 to pay off student loans. The beneficiary can also be changed to other family members.
  • Roth IRA Conversions: We have been helping many clients transfer unused 529 funds into Roth IRAs for their children. You can roll over up to $35,000 over their lifetime—a massive advantage for their retirement.
  • “Front-Loading”: In 2026, you can “front-load” five years of gifts at once. Up to $95,000 for individuals or $190,000 for married couples (without triggering gift taxes).

It’s not uncommon to see new graduates entering the workforce with over $100,000 in student debt. Starting a career without that burden is one of the greatest head starts a parent can provide.

 

“Trump Accounts” (New for 2026)

This is a new tool available for children born between January 1, 2025, and December 31, 2028.

  • These accounts receive a $1,000 Treasury-funded seed deposit.
  • Anyone can contribute up to $5,000 per year (non-deductible). No earned income is required for the child.
  • Funds grow tax-deferred in low-cost index funds. When the child turns 18, the account converts to a Traditional IRA, which can then be converted to a Roth IRA for decades of tax-free growth.

 

Annual Gifting & Estates

As of 2026, the annual gift tax exclusion is $19,000 per person ($38,000 for married couples). You can give this amount to as many people as you want without filing a gift tax return.

For high-net-worth families, moving money out of an estate now can save heirs hundreds of thousands in future taxes. We are seeing more parents help with home down payments today rather than leaving a larger inheritance later. You can gift a child a significant sum (e.g., $500,000) without them owing taxes; you simply utilize a portion of your lifetime gift tax exemption, which currently stands at $15 million per person.

 

UTMA Accounts

These are simple custodial accounts where the parent acts as the owner for a child beneficiary. Unlike IRAs, there are no contribution limits.

  • Note on Taxes: Be mindful of the “kiddie tax.” We generally recommend avoiding high-dividend stocks in these accounts.
  • Control: Ownership transfers to the child at age 18 or 21 (depending on the state). This requires proactive financial education so the recipient is prepared to manage the windfall responsibly.

 

Hire Your Child

If you own a business, this is a powerful tax-shifting strategy. By paying your child a reasonable wage for legitimate work (social media, filing, cleaning), you reduce your own taxable income.

  • Zero Federal Tax: In 2026, a child can earn up to the standard deduction ($16,100) and pay $0 in federal income tax.
  • Roth IRA Eligibility: That earned income allows them to contribute to a Custodial Roth IRA, jumpstarting their wealth-building journey.

 

What Truly Matters

Money alone won’t prepare your children for life. Your time, example, and guidance do. Teach responsibility, share the stakes, and instill lasting values.

Sahil Bloom offers a sobering message: By the time your child turns 18, you’ve spent ~95% of the time you will ever spend with them in your lifetime:

 

smart ways to help your child financially

 

Do you want help creating a thoughtful, multi-generational plan for your children?

Schedule a Call with our team; we can help you protect your legacy while empowering the next generation.

 

 

This content is for informational purposes only and does not constitute personalized investment advice.