Hi all
I need a bit of planning for helping out my kids (currently below 10 years old) of Japanese (+ foreign, non US) nationality. I am not a US Taxpayer.
My goal is to help prepare for the costly education/university phase mainly, any left over being anticipation of future gifts (ideally I die with 30-50M to my name and there is no inheritance tax for my wife and kids). I have life insurance (about 10 MJP x [number of kids + wife] if I die). We rent but should eventually buy, with a full loan hopefully. I choose the personal finance flair as most adequate, please let me know if not correct.
My plan is :
- give 1.1 M to each kids soon, specifically for future education purpose
- invest in equity in Junior Nisa and general investment account
- stop looking until they turn 18
- when they turn 18, give them life expense money and keep them as dependent
- when they go to university, have them sell their equity and pay the missing money (if any) directly to the institution
- when they finish university they can keep the leftovers if any
- consider doing the same donation or not the following year, etc
---
Here is my current understanding thanks to the sub, sorry for the many points - please do correct me if needed :
a) Children also have the yearly 1.1 MJPY gift exemption, and are generally separate tax subjects. I understand deciding now to give them 0.8M each for the next three years would be above this amount, but making separate decisions each year would be within the allowance.
b) Paying education for adult children is not taxable (better to do it directly to the institution to avoid confusion), however giving money for their life expenses (rent, food etc) during their university would be a gift unless I declare them as dependents. Giving money to the kids during their university years for living expenses would qualify them as dependent, as long as I would pay at least 380k a year (new minimum from 2023) and they actually need this money to live (if their income stay below a reasonable level, I think 9M was mentioned in the sub, with baitos they will be far from it). I understand paying their university fees and gifting them money as dependent would both still work for tax even if they study abroad.
c) I am looking for opening Junior NISAs at SBI (where I am already) for them and filling it up (slim global equity, reinvest dividend, and let it grow without looking) since there are a few years left in the Junior Nisa scheme. Any advice ?
d) Kid needs own account to transfer money, what institution are simple for kids ? It seems the Japan post is not in the list of possible banks :
Sumishin SBI Net Bank
Mizuho Bank
Suruga Bank
Bank of Tokyo-Mitsubishi UFJ
PayPay Bank
Sumitomo Mitsui Banking Corporation
Rakuten Bank
Seven Bank
e) I understand when the Junior Nisa system will close, no addition will be possible, the value will be reset at that time, the funds will continue to grow afterwards and cannot be touched until 18 years old, and from that point, tax would need to be paid for the gain between the end of the Junior Nisa scheme and the day the funds are taken out.
f) SBI offers to open a general trading account as the same time as the Junior Nisa. Is there any benefit to select a non-withholding account, considering kids do not have regular income ? I understand capital gains and dividend would be taxed even if they have absolutely no other income, there is no threshold right ?
g) is there any benefit to give money to kids (1.1M) beyond the Junior Nisa (0.8M) and use their own general investment account instead of mine to put the delta (0.3M), beyond just avoiding future gift taxes ?
h) can I mandate the kids to use this money for specific purposes such as education (such as paying for school fees or own living expenses during that time), how would I put that in writing ? What happens if they change their mind after becoming adults ?
i) can the kids contest inheritance if the amount I gave them at one point growth differently for each kid (ie baby would get more money at 18 than the 10 years old due to being in the market half the time). Of course I will try to equalize things (not certain I would have the money to do so if markets grow a ton), but in my home country you have to make a specific donation to secure the profits of your gift are separate from future inheritance challenges.
j) as the parent of a minor I can still take back the money, cash it out, and use it even for my own gain if I choose so (say I get cancer and get destitute, and need the money to eat and feed the family, but not spend on that child specifically)
Finally, is there anything else I should research to make the most out of the hard earned cash ?
Thank you all for any comment you may have, and apologies for the length
Cheers
I need a bit of planning for helping out my kids (currently below 10 years old) of Japanese (+ foreign, non US) nationality. I am not a US Taxpayer.
My goal is to help prepare for the costly education/university phase mainly, any left over being anticipation of future gifts (ideally I die with 30-50M to my name and there is no inheritance tax for my wife and kids). I have life insurance (about 10 MJP x [number of kids + wife] if I die). We rent but should eventually buy, with a full loan hopefully. I choose the personal finance flair as most adequate, please let me know if not correct.
My plan is :
- give 1.1 M to each kids soon, specifically for future education purpose
- invest in equity in Junior Nisa and general investment account
- stop looking until they turn 18
- when they turn 18, give them life expense money and keep them as dependent
- when they go to university, have them sell their equity and pay the missing money (if any) directly to the institution
- when they finish university they can keep the leftovers if any
- consider doing the same donation or not the following year, etc
---
Here is my current understanding thanks to the sub, sorry for the many points - please do correct me if needed :
a) Children also have the yearly 1.1 MJPY gift exemption, and are generally separate tax subjects. I understand deciding now to give them 0.8M each for the next three years would be above this amount, but making separate decisions each year would be within the allowance.
b) Paying education for adult children is not taxable (better to do it directly to the institution to avoid confusion), however giving money for their life expenses (rent, food etc) during their university would be a gift unless I declare them as dependents. Giving money to the kids during their university years for living expenses would qualify them as dependent, as long as I would pay at least 380k a year (new minimum from 2023) and they actually need this money to live (if their income stay below a reasonable level, I think 9M was mentioned in the sub, with baitos they will be far from it). I understand paying their university fees and gifting them money as dependent would both still work for tax even if they study abroad.
c) I am looking for opening Junior NISAs at SBI (where I am already) for them and filling it up (slim global equity, reinvest dividend, and let it grow without looking) since there are a few years left in the Junior Nisa scheme. Any advice ?
d) Kid needs own account to transfer money, what institution are simple for kids ? It seems the Japan post is not in the list of possible banks :
Sumishin SBI Net Bank
Mizuho Bank
Suruga Bank
Bank of Tokyo-Mitsubishi UFJ
PayPay Bank
Sumitomo Mitsui Banking Corporation
Rakuten Bank
Seven Bank
e) I understand when the Junior Nisa system will close, no addition will be possible, the value will be reset at that time, the funds will continue to grow afterwards and cannot be touched until 18 years old, and from that point, tax would need to be paid for the gain between the end of the Junior Nisa scheme and the day the funds are taken out.
f) SBI offers to open a general trading account as the same time as the Junior Nisa. Is there any benefit to select a non-withholding account, considering kids do not have regular income ? I understand capital gains and dividend would be taxed even if they have absolutely no other income, there is no threshold right ?
g) is there any benefit to give money to kids (1.1M) beyond the Junior Nisa (0.8M) and use their own general investment account instead of mine to put the delta (0.3M), beyond just avoiding future gift taxes ?
h) can I mandate the kids to use this money for specific purposes such as education (such as paying for school fees or own living expenses during that time), how would I put that in writing ? What happens if they change their mind after becoming adults ?
i) can the kids contest inheritance if the amount I gave them at one point growth differently for each kid (ie baby would get more money at 18 than the 10 years old due to being in the market half the time). Of course I will try to equalize things (not certain I would have the money to do so if markets grow a ton), but in my home country you have to make a specific donation to secure the profits of your gift are separate from future inheritance challenges.
j) as the parent of a minor I can still take back the money, cash it out, and use it even for my own gain if I choose so (say I get cancer and get destitute, and need the money to eat and feed the family, but not spend on that child specifically)
Finally, is there anything else I should research to make the most out of the hard earned cash ?
Thank you all for any comment you may have, and apologies for the length
Cheers