Money for godson

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Money for godson

Postby geoff_tewierik » Mon Jan 30, 2012 11:09 pm

This weekend we’re off to the christening of our nephew, for which we have been asked to be his godparents.

As we don’t have any kids of our own, and the idea of investing for the future is one we acknowledge as a good thing, we’ve been tossing around the idea that it would be nice to put some money away on a regular basis for our nephew for when he’s older, our gift to him as part of our role of being godparents.

At the moment we’re looking at $100 a month initially saved into an online savings account, until it gets to a balance that would be viable to have in a managed fund. We don’t have 529’s here in Australia, and if we open an account in his name before he’s 13 years old it’ll be smashed in taxes. There are options to put money into Scholastic funds, which would mature a small amount each year for uniforms and books, but according to my wife the parents have got education covered already.

A couple of things have popped up in our discussions;

We want the parents to know what we plan, and will pull the pin if they have any objections.
We don’t want the rest of the extended family to know, in case they decide future children of theirs would need us as godparents.
We can’t quite decide on when to pass it over and if there should be any caveats on its use. This one is something to think about long term and would be based on the child’s skills and abilities in late teens/early twenties. i.e. it could be used for University or to pay off student debt, a car, house deposit, seed fund for investing or starting a business.

Is there any other Captain Obvious things we may be missing in our thought processes?

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Re: Money for godson

Postby Sonja » Tue Jan 31, 2012 12:49 am

I'd check if there are any tax implications when gifting the amount of money to your godson at once when he becomes 21 (or whenever you decide). In NL you can only gift up to 5k at once before the beneficiary will need to pay income taxes over it.

Other than that I'd also consider what you want to do if you get more godchildren. Are you going to set aside 100 per month for each of them?

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Re: Money for godson

Postby peachy » Tue Jan 31, 2012 3:53 pm

I have a Goddaughter, but I haven't put money away for her just yet. She is 1. I also have a niece and nephew and no kids of my own. What I decided to do is buy one share of stock for each year of their birth, until I can't afford it anymore. So far, my niece has 3 shares of Coca-Cola, and my nephew just got his first share of Clorox today. :)

Since you are still getting out of debt, I really think that 100/month is A LOT to spend on a little baby and to take care of someone else's financial house when yours is not in complete order. I agree with Sonja in that other people may ask you to be their godparents, and while you don't have to do the same, it's just a lot of money. Maybe you can cheap out for now while you get out of debt, and then in a few years, you can start adding substantially to his account.

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Re: Money for godson

Postby wannabe2 » Wed Feb 15, 2012 11:47 am

Our decon said that he did a similar thing for his godchildren. In his case, he gave them each a chunk of money ( a few thousand dollars) for them to use as part of a down payment on a house. I think he waited until they were in their 20s to give it to them.

I think you do have to be careful so that you don't automatically get picked to be godparents to other children because of this, and also so that it does not appear as if you are playing favorites if there are only a few nieces/nephews.

Another option to consider in addition/ in lieu of is to include them in your will or as a beneficiary to a life insurance policy. There are rules about leaving property to minors, though, so do your research. None of us want to think that we may one day die, but it happens to all of us, and sometimes sooner than we want.

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