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Gifting with a warm hand
Old 09-13-2023, 11:51 PM   #1
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Gifting with a warm hand

So many here retired early with substantial amounts.

Did you start gifting money to your heirs? Did you get gifted money with a warm hand? Do you want to gift your heirs money earlier so the impact is bigger?

If you were given say $200k at 30 or $500k at 50 which would you take?

I think $200k at 30 would have been more impactful and helpful.
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Old 09-14-2023, 12:14 AM   #2
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Yes to all the questions in the second paragraph.

I have additional reasons for warm hand gifting:

1. I can see the impact - good or bad I would rather know. Good means I can enjoy seeing the benefit; bad may mean I need to change future gifting.

2. I might have an estate tax problem. Gifting earlier is more impactful.

3. I can provide advice (if asked) about how to handle the gift. Harder to do when I'm dead.

I also do charitable giving for similar reasons. I may also execute a partial disclaimer for similar reasons.

I would probably take the $500K at 50 since I was divorced at 37.

FWIW, there's a BH thread with the same title I have open in a different window:

https://www.bogleheads.org/forum/vie....php?p=7459727

Maybe there's some good thoughts there.
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Old 09-14-2023, 04:31 AM   #3
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"Gift" is a four letter word in my family. To quote my late grandfather: "You'll get my money when I'm dead!". To his credit, there was considerably more money at his passing than 30 years prior.

DW and I do help our nieces and nephews and have paid for their college and we're now down to buying baby clothes as gifts for the new arrivals, but we have no plan for early disbursements.
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Old 09-14-2023, 04:31 AM   #4
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Yes I do try to help our kids now rather than when I am gone, 200K at 30 would be my choice for sure but it never arrived and neither did the 500k at 50. There are so many people suffering in the World, just look at recent events in Morocco and Libya. A few hundred $ is all it takes to help a couple of families out.
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Old 09-14-2023, 04:47 AM   #5
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Yes we have started gifting to our heirs, helping them buy and set up homes, plus providing an additional income stream so they can save more in their own retirement plans.

We didnít receive any gifts or inheritances of significance ourselves until after we had retired ourselves so it is nice to be able to help out our children and on occasion other family members at a time of their lives when it matters more. We also continue to gift to charities.
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Old 09-14-2023, 05:00 AM   #6
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Back in 2012, when my Grandmom was still alive, my Mom, who was handling some of Grandmom's financial affairs, dipped into our inheritances a bit early. It was with Grandmom's blessing, so there was nothing underhanded going on. Anyway, Mom cut a $10K check for each of us...herself, my uncle, and me.

Unfortunately, after the fact, we found out there were some implied strings attached. Not from Grandmom; she didn't care. But from Mom! Mom had simply put her $10K into a savings account, as sort of "emergency money" in case we needed to help out Grandmom later in life. She assumed that my uncle and I would do the same. But, she also must have assumed we were mindreaders, because she didn't actually TELL either of this until after the fact!

Anyway, I used my $10K to pay down the mortgage. My uncle used his $10K, a few months later, to make a substantial down payment on a new 2013 Camry. Mom was annoyed at both of us. I just told her that if we needed money to help out Grandmom later on, I could either cash in some investments. Or, simply pull it back out of the mortgage, as it was actually an HELOC. And as for my uncle, well that Camry was only about $20-21K total, so it's not like he was going for something extravagant. That down payment covered almost half of it, and his previous car was an '03 Corolla with about 240,000 miles. And, perceptions of vaunted Toyota reliability aside, that thing was a rolling time bomb at that point.

Anyway, that was the only time Mom did a premature disbursement from Grandmom's estate. But, when Grandmom passed away, in 2015, she was just fine, financially.

I have thought about, as I get older, pulling out some of my money and giving it to some friends, and relatives, who have kids that might need help with college and such. I don't have any siblings, and no kids of my own, so the closest relatives would be cousins and their kids.

In my case, as for getting $200K at the age of 30, or $500K at 50, I'm not sure which would have done much better for me. Looking at my records, when I was 30, which would have been 2000, I had about $50K in invested assets. I had a mortgage balance of around $73.6K or so on a condo that might have been worth $95-100K. The interest rate was 7.25%, but at the time that didn't seem bad. The principal/interest portion of the monthly payment was $506. I had also recently bought a 2000 Intrepid, on a 5 year term, but it was at 0.9%. Its payment was $347.66/mo.

So, if I landed $200K at that timeframe, I wouldn't have used it to pay anything down. However, I did have aspirations of one day selling the condo and moving to a single family home, so I might have used the money to help facilitate that. Back in 2000, you could still get the type of house that would have made me happy for around $150-175K, so I could have upgraded from the condo to a house, but still keeping a mortgage, and invested the rest.

However, at that age, it might have also set off a chain of events that altered my life, compared to where it is now. For instance, Grandmom had a second house, across the street from her, that had been in the family since before the Civil War. Well, the property had been; the house only dated to 1916. She had been using it as a rental. In 2003, she let me move into it. She also put my name on the title, as well as my uncle's, so that he didn't get screwed out of his ultimate inheritance. We would have put Mom's name on it as well, but she wasn't concerned about it. Anyway, I got to live there, rent free, although I did take out an HELOC, and some of that got invested. When I sold the condo, I walked away with a pretty good amount, as well.

But if I had landed $200K in 2000, and gone on and upgraded from the condo to a house right then and there, it's doubtful I would have moved in to the old 1916 house a couple years later. In the overall scheme of things, I might be better off today or worse off, who knows?

Now, if I landed the $500K at 50, which would have been in April of 2020? Well, my nest egg was down pretty significantly thanks to that Covid crash. I actually bottomed out on March 23 and made a pretty good recovery by my birthday, but still had a ways to go. So, investing a good chunk of that, at market lows, it would have bounced back nicely as the market improved.

By the end of 2021, I was around the $2.5M mark, and briefly topped it a few times, and was seriously considering retirement. I even remember thinking that if I was still around $2.5M by my 52nd birthday, I'd do it. By April of 2022 I was down to around $2.4M, but was also aware of how bad inflation had gotten, so that number wasn't as good as I had once thought it was. And, I just had a feeling things were going to get worse, so I kept working.

If I'd had that extra $500K, it would have put me over $3M by the end of 2021, and I would have probably retired then. Even if I wanted to hold out to my 52nd birthday, I would've still been at least around $2.9M, felt that was good enough, and probably retired. And then, as the market kept dropping, I'd probably be on here whining about second having second thoughts

Anyway, sorry for the drawn out response...but sometimes these "what if" scenarios can be kinda fun to think about.
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Old 09-14-2023, 05:31 AM   #7
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I have mixed feeling on giving to my only son and family while they are in their younger ages (under 50 years of age). I think it could do more harm than good.

After saying that we have gifted once to my son/family for a new home when they got married. They both had homes neither homes worked for their needs so my son bought one that worked and with mortgages on their existing homes getting another mortgage was going to be a nightmare. So, we gifted him the money using the lifetime inheritance gifting option.

It was nice to been able to help them out, but I feel it makes too easy for them. I like to be there financially for them as a safety net only, not as their handout program.

I believe a too big of gift can put a negative mindset for these young people. Even if they are hardworking and have not asked for anything or asked for help financially in their life.
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Old 09-14-2023, 06:03 AM   #8
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Yes, I've gifted money to my potential heirs. My Dad gave his kids some money, most of us passed some of it along to our kids. My kids used the money as part of a house down payment. I'm sure that made me, my kids, and my dad happy. They could have used that money for anything, it was a tax free no strings attached gift. But I was happy to see them use it in a way I thought was beneficial to them. I also gifted them some house warming money. Again, no strings.
I'd like to gift them some more, but only if I'm pretty darn sure we will not need it.
My parents "gift" to me (among others) is that I likely do not have to take care of them financially. That is a gift I'd like to pass on to my children.
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Old 09-14-2023, 06:18 AM   #9
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Originally Posted by livingalmostlarge View Post
So many here retired early with substantial amounts.

Did you start gifting money to your heirs? Did you get gifted money with a warm hand? Do you want to gift your heirs money earlier so the impact is bigger?

If you were given say $200k at 30 or $500k at 50 which would you take?

I think $200k at 30 would have been more impactful and helpful.
Yes, we like to gift while we’re alive, heirs and charities. Our direct heirs aren’t young.
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Old 09-14-2023, 06:21 AM   #10
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None of the above. Gifted nothing besides college, and I think M&D gave me $2500 when I bought a house at 31?. Have no heirs, don't plan to gift to niece/nephew beyond small things - fund their first retirement account with $500, then gift to that, will give generously at weddings, kids, but not multi thousand types. Rest will be in the will.

So, no, not Xtimes income type gifts. Not lottery or change-your-life gifts. I would of course help out in times of trouble of circumstance, if it came to it.

$200k at 30 I would have have been awed, but messed up. At best it would have gone in a saving account. Well, most of it.
$500k at 50 I would have DCA'd and not even felt.
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Old 09-14-2023, 06:22 AM   #11
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I have been completely financially alone since I left home at 18 and have never had the experience of being able to count on others to help me if times get tough. It has led me to be careful about money and to prepare for any eventuality. The young wife and I have no children, so we will be solely responsible when it comes to late life care, which I imagine will be expensive. For that reason, I expect that we will leave whatever remains after we're gone, but we'll hang on to it until then, just in case.
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Old 09-14-2023, 06:24 AM   #12
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We have gifted a few times to close relatives and immediate family.

Immediate family- it was primarily event related. They could enlarge the event, save the $ for future, etc. no strings. Close relatives - it was helping them through a situation.

I think this is very person / situation specific.

DW & I - $$ from say 29 - 35 would have been helpful. Before - would have not truely helped, after - would have just been gravy. Now - 50s - would allow for larger or nicer expenditures (like vehicle) - gravy.

For our kids (late 20s) - itís too early in their lives to truely help them. (Millionaire next door reasons). Situation gifting is beneficial, only. They are working, getting their life plan together, etc.
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Old 09-14-2023, 06:25 AM   #13
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My parents didn't- they paid for our educations, helped a few with house down payments and then we were on our own. Mom died in 2016 and Dad died in 2021; my share of the inheritance was $225K. I was stunned (I have 4 siblings and Dad had been in LTC for 18 months).

I've been giving DS and DDIL $15K or so per year- not enough to impair their independence, no strings attached. I have no idea what they do with it but they're frugal and I haven't seen a new Escalade in their driveway. I've also loosened the purse strings on experiences with them- our next trip to Chicago will be the whole family. That's airfare from Des Moines for 6 people, 2 nights in the hotel (adjoining rooms), the Children's Museum and a ton of overpriced meals. Previously I've gone only with the 2 older girls (6 and 9). Their 4-year old brother is SO excited!

I'm giving away Dad's inheritance over 10 years. I don't need it. Most will go into the kids' 529 accounts, most of the rest to charity. It's a joy to see a need and help with it. I still keep an eagle eye on my total net worth- I don't want to give away so much that I can't pay for my own LTC if needed.

As for the amounts at 30 or 50, I'm just as glad I inherited from Dad at 68. At 30 I was about to meet the man who later became my Ex and he was a financial train wreck. I was an enabler and we lived in a HCOL area and he was unemployed the last 5 years of the marriage. I may have ended up using it to prop him up. I like to think I wouldn't have but who knows? At any other time I would have invested it. I'm a saver just like my parents.
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Old 09-14-2023, 06:47 AM   #14
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$200k at 30 I would have have been awed, but messed up. At best it would have gone in a saving account. Well, most of it.

Sometimes I wonder what would have happened if I had received $200k when I was 30. Not likely. I could have paid cash for my house, and paid off student loans. But then I might have never learned financial discipline.


Edit: I think the concept of paying your debts, while also saving for the future, is a good lesson to learn.
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Old 09-14-2023, 06:59 AM   #15
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Interesting topic.

I've seen a lot of articles talking about the high percentage of people who still provide financial support for their adult children. This was also discussed back in the classic 1998 book The Millionaire Next Door. One commonality of the millionaires they interviewed was that they were not providing any significant financial support for their adult children.

There can be a fine line between "support" and "gifting" and it will really vary case by case. Only you can determine if giving your kid money early on will help or hurt.


My mom gifted us 10K toward our down payment when we bought our house in 1994. I was 29. We were buying a house that was well within our means (1.5x income) but putting down 20% at that point in our lives wasn't realistic and her gift allowed us to do that. I'd be happy to do the same for our daughter if the situation arose because I feel she is very responsible with her money and giving her that boost would only strengthen her position.


If we decide to gift her money while we're alive, it would have to be that sort of situation where the money was going for a specific purpose. We wouldn't just give her 50K or 100K to do whatever she wanted to with it.


My mom still gives us monetary gifts from time to time. Nothing big but stuff like a couple of weeks ago my wife bought some new clothes and my mom gave her $100, or if we're going on vacation, she'll give us a couple hundred to spend on something special. I'd be fine with doing that for our kid, and we have done that.
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Old 09-14-2023, 07:10 AM   #16
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$200,000 at 30 would most likely been lost due to a divorce at 36. The $500,000 at 50 would have been invested.
We give to our sons about $20,000-$25,000 each Christmas, plus we own the homes they live in and will eventually inherit for free. We also fund the 529 plans for our grandkids. We give generously to charity, some of which we can see an immediate impact to the lives of others through a child care scholarship for single parents. DW was widowed with a two year old when she was 26, so this inspired the scholarship.
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Old 09-14-2023, 07:10 AM   #17
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We have been gifting to our DD for many years now, up to annual non re-portable level. Except for one year when we bought her a house. Then we filed IRS form 709. But, it's been a double edged sword.
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Old 09-14-2023, 07:19 AM   #18
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There can be a fine line between "support" and "gifting" and it will really vary case by case. Only you can determine if giving your kid money early on will help or hurt.
I agree. DS and DDIL asked for money only once. They were buying a new-to-them house (Baby #3 was on the drawing board) and DS had figured that $12-$15K added to the down payment would keep the carrying costs for the new place at the same level as the old one. I happily wrote the a check for $15K.

I know them- if I told them one year that I wouldn't be gifting them anything they'd be fine with that. For me, that's the indication that they're keeping it in proper perspective.
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Old 09-14-2023, 07:28 AM   #19
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we will be solely responsible when it comes to late life care, which I imagine will be expensive. For that reason, I expect that we will leave whatever remains after we're gone, but we'll hang on to it until then, just in case.
We have kids and I think one of my main responsibilities is to do my best to not need their financial assistance in my final years. They can have whatís left and hopefully, there will be some left.

Our oldest grandchild is 17 and Iíd help with college or something to help him into being self sufficient (same for the other two grandkids) but nothing just given for no reason. Our nest egg is just not large enough for that type of giving.

While working, I did fully pay for one daughterís university education and the other daughter I bought a house (both ended up costing about the same), but as a retired person, those kind of expenditures (gifts) are over.
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Old 09-14-2023, 07:37 AM   #20
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Neither I nor DW ever received a gift from a warm hand. My current thought is to have as much as I can as I consider it our LTC insurance. Only time will tell if we need it. We feel that one of the biggest gifts we can give to our kids is not to be a financial burden to them in our later years. We taught them to be financially independent early on and intend to keep repeating that lesson. They will likely be surprised when they receive their inheritances.

OTOH, when DW received an inheritance from her DM, we didn't need it. She shared some that with our kids. In addition, she took our entire family on a nice vacation this year.
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