Kids and House Down Payment

[MichealKnight]

As usual I like to worry about things that have nothing to do with right now.

DD/DS are 15 and 10 respectively.

Most of you are much more seasoned than I am so I thought I would ask.

Did you help your grown kids with 1st house purchase? If so what did you do?

Also.... when the kids were "raised" - ie old enough, educated, whatever..... did you give any assistance financially be it a savings deposit, emergency funds, etc?


Thanks

 

[badatmath]

I have no kids but my parents gave me zero after I was launched.
Not sure that helps. Didn't cross my mind until I was much older that some parents did that.

 

[folivier]

Both our sons were awarded full ride scholarships and didn't use the money my dad and us had saved/invested for their college. After their graduation we gave them that money which they both used as nice down payments for their first house.

 

[twobits]

We gave each of our three children the option of living at home rent free for one year after graduating from college so they could build up their savings accounts. One stayed the full year, the other two a few months. Once they moved out, they were completely on their own for all bills.

When one of our sons bought his first house, we helped with a gift of 10k toward his down payment, though, and will also help the other two if they decide to buy vs own. We do treat for some dinners out and family vacations, but not all that often. Most of our family get togethers are an outdoor activity (like hiking or biking in the summer and snowshoeing in the winter) and then a stop at a brewery.

During college, we gave each child help with tuition, maybe enough to pay one full year, but which was spread out over 4-5 years. We also covered their car insurance if they kept their records clean of speeding tickets.

Our parents were at a different place financially when we were in our 20s, but they helped us in numerous other ways that were greatly appreciated. There is a lot of satisfaction in knowing you did it yourself, and I worried about taking that away from our children, so we compromised with some financial help but where they still needed to do most of the work.

 

[RetiredAt49]

My parents gave me zero after high school and I was 100% okay with it because I grew up on a farm, worked hard, and earned everything myself.

My kids were given a tuition payment plan where they had to pay for their first semester and depending on subsequent grades their college would be paid in full, half, or not at all. Let’s just say I haven’t had to pay much for college…

I personally feel kids should take most if not all financially responsibility when they graduate from high school.

 

[Dash man]

We gift the boys some money every Christmas, and own the homes they live in. They will eventually inherit the homes with a stepped up basis. We take our family, including some siblings, nieces and nephews on vacations every few years. We are also saving for our grandkids college if they choose to go, along with the kids of a nephew who passed away.
Nobody in our family has asked us for money, and often refuse it if we offer to help with a unexpected expense. But everyone enjoys the family vacations.

 

[MarieIG]

As usual I like to worry about things that have nothing to do with right now.

DD/DS are 15 and 10 respectively.

Most of you are much more seasoned than I am so I thought I would ask.

Did you help your grown kids with 1st house purchase? If so what did you do?

Also.... when the kids were "raised" - ie old enough, educated, whatever..... did you give any assistance financially be it a savings deposit, emergency funds, etc?


Thanks

Yes, but I am wondering if this is a bit therapeutic for you (in particular right now.)

But, I'll play.

After they were raised/ educated - there was some assistance with initial funding of Roths (to get them excited about it), wedding expenses and weeding gifts. When they went off to college or to the military, I established small joint checking accounts. The ones in school were allowed to use the checking account for books. Kiddos driving to school got reliable used cars and were to work part-time. The ones going military got a cash gift. (I don't recall them ever asking/ needing additional funds.) In fact, one of my sons who enlisted noticed that some of the other kids were sending money home, and called and asked us if we needed him to help us. (That was a no son thank you, we can manage.) The Kiddos were allowed to boomerang to save their emergency funds/ downpayments, etc. I'm a proponent of supplementing a downpayment.

I tried to teach my kiddos to be fiscally responsible and be in a position to make their own way. That didn't mean we never gift, but I didn't want them, as adults, to rely on us.

 

[Morgan22]

Both of our kids say they aren't interested in owning homes. But we did pay for college for both.
We set up our kids to be debt free so they could be independent once they graduated from college. One only did 2 years the other did 4. We also bought their first cars and paid for auto insurance while they were in high school/college. They both seem to be very independent and doing well now.

 

[Koolau]

So far, we've given each kid $20K toward homes. We've also started Roths for each kid with total payment on our part of about $20K. I consider both these gifts as a gentle "shove" to become independent. It seems to have w*rked very well. We plan to give more in the future. The downside (for the kids) is we don't plan to leave much to them when we die. The bulk of our "fortune" is designated to our charities. We've shared this with the kids.

 

[SecondCor521]

As usual I like to worry about things that have nothing to do with right now.

DD/DS are 15 and 10 respectively.

Most of you are much more seasoned than I am so I thought I would ask.

Did you help your grown kids with 1st house purchase? If so what did you do?

Also.... when the kids were "raised" - ie old enough, educated, whatever..... did you give any assistance financially be it a savings deposit, emergency funds, etc?

Thanks

I'm single 54M, with 28DS, 23DS, and 21DD.

It's going to be quite varied, and will depend on the overall level of wealth in the family, what the person experienced growing up from their parents and how that went, and probably other things.

28DS just bought his first home two months ago. I "helped" by educating him about the process, the financial aspects, the responsibilities, and smart ways to accumulate the down payment. I also "helped" by tagging along with him to visit potential homes - at his request. Financially, I paid for his college education, and let him live at home rent free for the vast majority of those 28 years. He also got some of his leftover college funds that he put towards his down payment.

23DS did about two years of college and is currently living at home. He just started a business about 9 months ago and it's doing well. He also is living here rent free for the time being. I plan to help by educating him like I did with 28DS and let him live rent free as long as he's making good progress. Since he hasn't finished his degree yet but says he wants to, the college fund is just being held in reserve right now. We might negotiate something where the rest of the college fund becomes a capital infusion into his business or a house down payment, but if so it would let me off the hook vis-a-vis the rest of his college.

21DS is finishing their senior year in college. They can live at home rent free if they wish, and there will be leftover college money in this situation as well, but they want to funnel that into their Roth.

...

As for your second question, I'm assuming you're asking in general. In general, I educate them and guide them, pay for their college, and let them live at home rent free as long as they're making good progress. And leftover college money will be theirs too. I'll probably disclaim part of my (likely but never guaranteed) inheritance to them also. Oh, and I do things like take them on vacations with me, and take them out to eat, that sort of stuff. Past that, they're on their own. Although I do currently plan to have them inherit my estate equally; hopefully that will be 30+ years from now, so they'll be in their 50s at that point.

 

[rodi]

My sons are still on the family payroll, so to speak. Both are enrolled full time in college and we're using 529 money that we saved for this purpose to pay for the school expenses and some of their housing. They both work part time on top of their school.

We offered both boys a 'match' when they first started w-2 jobs (high school)... We'd match dollar for dollar on the first $500 invested in a Roth. Older son has continued to contribute... younger son, not as much.

We have enough in the 529's for their bachelors with no student loans. Graduate school will be on them (or a new negotiation.)

Hubby and I have talked about helping them with a down payment, sometime in the future. I lean towards the deal my parents gave me - a loan, with amortized interest. I was able to borrow enough from my folks to be able to put down 20% vs the 12% I had saved. Hubby is leaning more towards a gift. This bridge will be crossed several years from now (probably 10)... we have time.

 

[aaronc879]

I wouldn't give a large gift like that unless I was retired with no worries of running out of money. My parents didn't help me out with any large amount like a house down payment but now that my Dad is 100% disabled thru the VA he gives my Brother an I $1000 each for both birthday and Christmas to help us out some.

 

[livingalmostlarge]

No help but I am absolutely going to help the my DK1 13 and DK2 10. I plan on paying for college (no loans), probably graduate school (if they want), and a wedding (nice gift), and house down payment.

Why? I think because I want too. I didn't get help and neither did DH, but if we can why shouldn't we? I also want to pay for trips and other stuff we didn't and don't get.

I mean my mom has worked really hard and is preserving her money so my kids are going to inherit if I had to guess a $1m from her each while they are in their 30s or 40s. I am not telling them this. But since I took over her stuff, I put their names on her retirement accounts beneficiaries and I told her to give them her condo and house. I don't need it and so if it makes life a little easier I think it might be nice.

My parents didn't have that ability to help me so I might as well pay it forward. Is it really so wrong?

 

[savory]

We did one thing each year for a few years. At our family vacations, I carved out some time to torture them with a financial discussion. We discussed how banks, mortgages and the stock market works. Is buying a house really better than renting? How to research college scholarships, the cost of college, setting a budget and what they could expect from their folks financially, now and in the future.

Who really knows what worked? But both kids following different paths figured things out in their own way. They give me a hard (fun) time about those vacation discussions but I would do it again.

 

[athena53]

I personally feel kids should take most if not all financial responsibility when they graduate from high school.

See the thread on college costs- it's not as cheap as it used to be. I have one child, my son, who went to Drake in Des Moines- respectable but sure not Ivy League- and it was $30K/year including room and board in 2003-2007. How do you get that from summer or PT jobs? Yes, there's community colleges, state universities, and commuting to school but it's still a lotta money and not everyone lives close enough to commute to a good school.

Anyway- my parents put the 5 of us through college, we all had summer jobs that paid maybe 10% of that. We all got undergrade degrees with good grades and had long, lucrative careers. Each of us has either an advanced degree, a respected professional designation or (in the case of my sister) both. Beyond that, there may have been loans for the first house (I had one) paid back long ago but that was it- they'd paid for our educations but now we had to figure out how to make a living.

My Ex's sister, who with her husband was a HUGELY successful entrepreneur, started saving for his college after he was born. It ended up being half the cost of his education and I cheerfully picked up the other half, which DS supplemented with summer jobs. There was $14K left over after from the Aunt's UTMA account (too early for 529s) when he graduated and he eventually used it as a down payment on the first house. When the 3rd baby was on the drawing board he and DDIL needed a bigger house. He asked if I'd loan or gift them $12-$15K, which would be enough that their monthly costs would stay the same. I wrote them a check for $15K and said it was a gift.

Now I write a check for $15K or so every year. They don't ask for it, they appreciate it, I have no idea what they do with it but I don't see any glitzy new SUVs in their driveway. It's not something I planned but I can see that it's not endangering my solvency and they're very good with money.

For the OP, so much depends on the future; his own solvency, how responsible the kids are, whether they work hard in college if they go that route.

 

[MarieIG]

No help but I am absolutely going to help the my DK1 13 and DK2 10. I plan on paying for college (no loans), probably graduate school (if they want), and a wedding (nice gift), and house down payment.

Why? I think because I want too. I didn't get help and neither did DH, but if we can why shouldn't we? I also want to pay for trips and other stuff we didn't and don't get.

I mean my mom has worked really hard and is preserving her money so my kids are going to inherit if I had to guess a $1m from her each while they are in their 30s or 40s. I am not telling them this. But since I took over her stuff, I put their names on her retirement accounts beneficiaries and I told her to give them her condo and house. I don't need it and so if it makes life a little easier I think it might be nice.

My parents didn't have that ability to help me so I might as well pay it forward. Is it really so wrong?

I don't see any issues with paying for education, trips with the kiddos, gifting etc. What I do see as a potential issue is having your DM give the kids her condo and house, and putting them as beneficiaries on her IRAs - now. This could potentially give then to access to seven figures each when they turn 18. Rather I would set up a trust which gives you authority to disburse funds at certain ages and/or for certain purposes, i.e. college, downpayment, 35 years old, 45 years old. (If your mom is still around when they are older, and have demonstrated responsibility to your satisfaction, you could then put them as beneficiaries on the IRAs.) You might want to consult an attorney regarding tax implications, or particular scenarios.

Why? Not because there is any objection to your children inheriting. But - I have known of 18-year-olds inheriting large sums of money, and spending it on drugs, motorcycles/cars and partying - and it's gone before 25. At 18 they are (typically) easier targets for predators, than they would be at 35.

(And the money being gone wasn't the main issue, it was the funding of a less than productive life-style - and getting them off on the wrong foot so to say.)

 

[badatmath]

I don't see any issues with paying for education, trips with the kiddos, gifting etc. What I do see as a potential issue is having your DM give the kids her condo and house, and putting them as beneficiaries on her IRAs - now. This could potentially give then to access to seven figures each when they turn 18. Rather I would set up a trust which gives you authority to disburse funds at certain ages and/or for certain purposes, i.e. college, downpayment, 35 years old, 45 years old. (If your mom is still around when they are older, and have demonstrated responsibility to your satisfaction, you could then put them as beneficiaries on the IRAs.) You might want to consult an attorney regarding tax implications, or particular scenarios.

Why? Not because there is any objection to your children inheriting. But - I have known of 18-year-olds inheriting large sums of money, and spending it on drugs, motorcycles/cars and partying - and it's gone before 25. At 18 they are (typically) easier targets for predators, than they would be at 35.

(And the money being gone wasn't the main issue, it was the funding of a less than productive life-style - and getting them off on the wrong foot so to say.)

Would putting it in trust avoid the 10 year period during which the heirs had to take the RMDs?

 

[Telly]

Did you help your grown kids with 1st house purchase? If so what did you do?

Also.... when the kids were "raised" - ie old enough, educated, whatever..... did you give any assistance financially be it a savings deposit, emergency funds, etc?

No, and No.

We paid our kids university expenses to attain Bachelors degrees in-resident at state flagship universities. They received some scholarships too, but the the majority of $ came from us. They did not goof off, did well, and have been gainfully employed in their majors for years now.
I worked in factories and went to Jr college, got 2 yr. degree, worked more and took classes that transferred, then went away as a transfer student to the state flagship University, my discipline rated tied for 2nd in ranking in the US (MIT #1, we were tied with Stanford). Coming in as a transfer student, I missed making the attachments that many made coming in as a freshman. Our kids started out at flagships, made the attachments. All good.

 

[RunningBum]

I've gifted my son the max most years without having to file an excess gift form. I don't remember when I started doing this, and I didn't put any strings on it. Why I did that is my business and I'm not going to justify it to anyone here. When he bought a house 2 years ago he had saved enough that he could make a 20% down payment. I preferred this to doing a larger gift for the down payment and filling out Form 709.

Sure, this could have backfired and he could've blown through the money, but that's not a significant sum and it would've been a sign to me that I might have to do something with my estate so he wouldn't get a huge sum all at once that might still blow through quickly.

 

[pacergal]

We were on a very tight budget while raising our kids. We told our kids we could pay for two years at Community college, and they could always live at home, expense free. We would help with payback of any loans if we were able, but not to count on it.
We paid for DD wedding, gave DS some $ when he got married.
Fast forward to retirement, we have been able to pay off sons school loans, gave DD $25,000 for house down payment.
If/when DS wants to purchase a house, he will get the same. And if/when DD returns to school, we will help pay for it.
They are good, responsible kids, making their own way and very thankful for any money we give.

 

[FlaGator]

Here's some discussion from early this year on a related topic.

https://www.early-retirement.org/fo...help-kids-get-started-116701.html#post2884565

 

[Tom52]

This is a very timely thread for me. My daughter who lives in Chicago mentioned to me that she would like to buy a condo as opposed to renting. She said it would likely take her several more years to save up enough for the 20% down payment. I am thinking that it would be nice to gift her some money to help with a down payment. I am looking into the possibility and trying to decide from where to take the funds. She will eventually inherit a very nice amount when we are gone but it would be nice to help a bit now when she could use it for a good cause.

 

[athena53]

You might want to consult an attorney regarding tax implications, or particular scenarios.

Why? Not because there is any objection to your children inheriting. But - I have known of 18-year-olds inheriting large sums of money, and spending it on drugs, motorcycles/cars and partying - and it's gone before 25. At 18 they are (typically) easier targets for predators, than they would be at 35.

I agree- and it's not just the risk of squandering it on high living. At 18 I was smart, financially sensible, quantitative and interested in investing. (Dad had started when I was a teenager.) If I'd inherited $1 million I probably would have looked to Dad to help manage it but absent that, I might still have made the mistakes early in my investing journey that I made with small amounts when I had time to recover. Remembering what "stockbrokers" were like back then (and I know many are like that now) I probably would have bought what they were being paid to recommend. Now, of course, with Bitcoin, RobinHood, etc. there are even more ways for a young person with solid values to mismanage a large inheritance.

 

[Aerides]

After I closed on my house, my parents gave me $2500 as a housewarming gift. They did the same for my sister. That's all.

 

[MarieIG]

Would putting it in trust avoid the 10 year period during which the heirs had to take the RMDs?

I was thinking about the house and the condo too. Re the IRAs, there are definite benefits to having individuals as beneficiaries - however, I would balance these with the overall wellbeing of the children. OP may, or may not, want to have herself as beneficiary on the IRAs until her children are fiscally responsible. It would allow for the stretch - and she could spend the money on her kiddos - but she would probably be in a higher tax bracket - hence the recommendation to consult with an attorney as to how structure this to best meet the needs of all concerned.

I have no issues with passing down assets and minimizing taxes - however my main concern was how access to substantial funds at a very young age might effect the wellbeing of the children. The poster in question however, may think my concern of kiddos having access to money too young is without merit, which is totally her prerogative, however I wanted to put it out there.