The 5 D’s
Dear Friends and Family,
Did you know that September is the month with the most birthdays? Perhaps your (grand)children are celebrating another year this month, or maybe you are. If so, Happy Birthday!
Have you thought about what you’re giving as a gift? Before you seal the envelope and put it in the mail, ask yourself, "am I just sending a random gift card for them to spend, or am I gifting an asset that will grow for years to come?" While cash might be a quick and easy present for a young kid, it isn’t smart long-term wealth planning that will secure their future.
The 5 D's
In real estate, most real estate agents see Diapers, Diplomas, Diamonds, Divorce, Death as just another transaction opportunity for themselves. For me, each D is a chance to strategically think about your family's wealth and how to maintain it. Below are my ideas and tips for turning each D into a wealth building milestone through the lens of real estate, so birth is prepared for and death is far from the end...
Diapers
Whether we're talking about upsizing your home for your expanding family, or buying a paper savings bond for a newborn (Thanks FDR!), birth is a great opportunity to lay the foundation for family wealth, literally and figuratively. Working with trusted (real estate and/or financial) advisor, you can find ways to establish stability later in life without the expense of happiness now—be it buying a property for your future children to live in, investing in their future through securities, or educating them more directly about how wealth occurs. Starting young can set you (and them) up for success!
Diplomas
Typically, discussions about planning for college center on 529 accounts and the value of in-state tuition. However, there are other significant ways to transfer wealth to a fledgling leaving the nest. A common option is to cover their meal plan and dorm expenses or to be a guarantor on a lease. However, these aren't fixed assets and don’t lead to long-term financial independence. A win-win alternative could be purchasing a home for your college student and renting it back to them. You keep your wealth in the family, and they learn the value and importance of real estate investment (especially if they're staying local after graduation!).
Diamonds
Often a token of marriage, diamonds are symbols of wealth. While Elizabeth Taylor & Richard Burton certainly enjoyed them, I would focus on other investment ideas when it comes to "I do." For many newlyweds, their first home is often their diamond–a significant asset that grows in value. Gifting money for down payments can preserve wealth in a responsible way, but keep in mind the limits on gifting and the scrutiny of co-op boards I mentioned last month. Then, when it comes time to move again, selling is just one option for that "Diamond." It could also be used as collateral or rented out for a steady income, ensuring a continuation of accrued wealth.
Divorce
More than just a dreaded word, divorce is an emotionally challenging and financially straining event causing a dispersion of wealth. A prenup or postnup can establish each spouse's property and financial rights during times of love, when you're more likely to ensure each other's comfort and support. Then, if the time comes, excessive financial stress is mitigated, and individuals can re-establish their respective households without destroying the wealth they created together. Moreover, prenups help to build trust and foster open communication about finances.
Death
It's never an easy topic to broach, but death is still a reality, for now... Ensuring that families are well-provided for ranks as the most critical factor in estate planning. While many people balk at planning for their post mortem (which may already be too late), few understand that passing on wealth during their lifetime tends to result in higher satisfaction and happiness. Considerations about long-term care, taxes, and the emotional pull of having worked so hard to build wealth can make it hard to part with, but many are finding joy in seeing the results of their generosity while they're still living.
If you and your loved ones are interested in learning more about long-term estate planning and real estate investing, contact me to discuss the possibilities that could work best for everyone involved (including those who have yet to be born!).
All the best,
Toni Haber
Licensed Associate Real Estate Broker
Founder, Toni Haber Team | Private Client Advisors
TONI@compass.com | 917.543.1999
