Gifting to Children

[savory]

We were discussing gifting our children. It is meant to be some extra cash just to have on hand for whatever they would like to do.

We are in agreement with gifting but not necessarily the amount. Our DS is married with 2 young kids. Our daughter is single. Our will provides a 50/50 split.

We were discussing a 50/50 gift. Or, a 50/50 gift, plus a gift for the grandchildren, for their future education. That feels to one of us as if we are providing a larger gift to DS, even if it is directed at the grandchildren. DS could make the choice of directing his gift money to his children, if he so chooses. There are no strings attached to any of the gifting.

For the Ethicists out there, can you provide your thoughts of what is fair? This is an anal question is fair response.

 

[Retireby45ish]

If I understand you correctly you have one child who has children and the other is single without children.

If that is the case I would expect you gift 50/50 to each child. Giving a gift to the grandkids would be unfair to the child without children.

If the child with kids wants to use the gift for their children that is up to them.

That’s my opinion. I am married with no kids. My sister has kids. I’d feel a bit weird if my parents gave her more simply because she’s chosen to have a bunch of little monsters

 

[ScoopKona]

If I recall correctly, in the US the gift amount limit this year is $16K per recipient. Any more than that and there are tax implications.

 

[RockyMtn]

If I recall correctly, in the US the gift amount limit this year is $16K per recipient. Any more than that and there are tax implications.

True, however a married couple could each gift $16k for a total of $32k per gift without tax implications of any kind.

 

[MissMolly]

I, on the hand, feel just the opposite. Gifting 50/50 to the kids and then an additional amount, preferably into a 529, to the grandkids. I would not just flat-out give a lot cash to the grandkids. I see nothing unfair about that. I gift 50/50 to my kids. One is married with one grandchild, one is single. I make separate gifts into my granddaughter's 529 account. If and when my son marries and has kids, I will gift them separate money into their 529 accounts.

 

[ivinsfan]

If I understand you correctly you have one child who has children and the other is single without children.

If that is the case I would expect you gift 50/50 to each child. Giving a gift to the grandkids would be unfair to the child without children.

If the child with kids wants to use the gift for their children that is up to them.

That’s my opinion. I am married with no kids. My sister has kids. I’d feel a bit weird if my parents gave her more simply because she’s chosen to have a bunch of little monsters

These kids are living breathing humans that are part of your family. They are your parents direct descendents it's not really your place to say their grandparents shouldn't give them money. It's not your money it's your parents money.

 

[ivinsfan]

I, on the hand, feel just the opposite. Gifting 50/50 to the kids and then an additional amount, preferably into a 529, to the grandkids. I would not just flat-out give a lot cash to the grandkids. I see nothing unfair about that. I gift 50/50 to my kids. One is married with one grandchild, one is single. I make separate gifts into my granddaughter's 529 account. If and when my son marries and has kids, I will gift them separate money into their 529 accounts.

That's our approach as well. But I don't want one of my kids commenting in any manner about what I do with my money

 

[youbet]

We were discussing gifting our children. It is meant to be some extra cash just to have on hand for whatever they would like to do.

We are in agreement with gifting but not necessarily the amount. Our DS is married with 2 young kids. Our daughter is single. Our will provides a 50/50 split.

We were discussing a 50/50 gift. Or, a 50/50 gift, plus a gift for the grandchildren, for their future education. That feels to one of us as if we are providing a larger gift to DS, even if it is directed at the grandchildren. DS could make the choice of directing his gift money to his children, if he so chooses. There are no strings attached to any of the gifting.

For the Ethicists out there, can you provide your thoughts of what is fair?

Definitely not an "Ethicist," but I'll comment anyway.

My opinion is that you define what is "fair." That doesn't mean that either your son or your daughter won't disagree with your outlook. It just means that whatever you do, as long as it's what you want to do, is fair if you think it's fair.

What would I do? I'd split legacy plans 50/50 as you said you'd do. I would gift 50/50 now as desired and you can afford. But I'd also set up Coverdell ESA's and/or 529b's for the grandchildren.

We started educational savings programs for our three grandchildren as soon as they were born. Two are using them now and one is in high school. Having a substantial amount of resources available to help them at this point has proven to be very, very satisfying to DW and myself. Because we started when they were very young and the markets have been kind, it wasn't a painful process.

While providing for your grandchildrens' education might seem "unfair" to your DD (or not, who knows?), it's something you're really doing for yourselves as having the resources there will make YOU very happy when that time comes. I doubt your daughter would want to deprive you of that.

 

[ScoopKona]

I, on the hand, feel just the opposite. Gifting 50/50 to the kids and then an additional amount, preferably into a 529, to the grandkids.

100% agree. If someone is in the position of wanting to move generational wealth, they should move generational wealth. Give the limit to each child, spouse and grandchild if you can.

If there is jealousy between siblings because one is childless/child-free and one is not, you can remind the child-free sibling that children cost a great deal of money. And you're only doing what the IRS says you can do.

The only attitude I'd tolerate is "Wow! thanks for the cash. We'll do something productive with it."

 

[aja8888]

True, however a married couple could each gift $16k for a total of $32k per gift without tax implications of any kind.

You can give more than $16 K, you just have to report it to the IRS as part of your lifetime gift allowance before you have to pay estate tax on the excess of the max allowance.

 

[aja8888]

If I understand you correctly you have one child who has children and the other is single without children.

If that is the case I would expect you gift 50/50 to each child. Giving a gift to the grandkids would be unfair to the child without children.

If the child with kids wants to use the gift for their children that is up to them.

That’s my opinion. I am married with no kids. My sister has kids. I’d feel a bit weird if my parents gave her more simply because she’s chosen to have a bunch of little monsters

Haha, did you forget that you were one of those "little monsters" once upon a time?

 

[corn18]

My wife has a desire to make everything equal. I could care less. If I were in your shoes, I would do 50/50 gifts to the kids and if I want to fund something for the grand kids, I would do that. Is it fair? Who cares. How about you just say Thank You and get on with your life. I would convey that in a nicer way to my kids, though. I would not be silent on the matter.

My MIL worries about being equal. Her son died 6 years ago of a drug overdose. He had one child. She worries about giving him money to help him out. She says she will reduce his inheritance to account for what she is giving now. I tell her to do what she wants. It's her money. Her grandson is a great kid and my kids are doing fine and have us to help them if they need it.

Baffles me that someone who has millions that she worked her butt off to have concerns herself with being "fair". If she ever gives us money, I will be very grateful and never think for a moment that she gave more to her son or grandson vs. my wife.

 

[ScoopKona]

I'll add to this that money, ploughed into an index fund that automatically reinvests dividends can set a young child up for life. Obtain an education, buy a first house, start a business, pay it forward generationally.

Hopefully the the grandchildren in question understand the mechanics of compounding dividends. And they see the wisdom of leaving the money alone to grow. But if they cash out at 18 and live like rap superstars for a few months, at least you tried.

 

[ivinsfan]

100% agree. If someone is in the position of wanting to move generational wealth, they should move generational wealth. Give the limit to each child, spouse and grandchild if you can.

If there is jealousy between siblings because one is childless/child-free and one is not, you can remind the child-free sibling that children cost a great deal of money. And you're only doing what the IRS says you can do.

The only attitude I'd tolerate is "Wow! thanks for the cash. We'll do something productive with it."

I don't agree with the explanation part. If I had a kid that complained about us funding college for their niece or nephew I tell them you are petty and this is NOYB

 

[MichaelB]

For the Ethicists out there, can you provide your thoughts of what is fair?

Fair is like beauty - it’s in the eye of the beholder. Each of the parties involved may (and probably will) see this differently and it is unlikely everyone will define “fair” the same way. It’s probably a good idea to make sure the givers - savory and spouse - are both comfortable with whatever approach is chosen. Agreement between spouses is more important than how the kids see it.

We have children and grandchildren, and our approach is to give similar amounts to each of our kids, and similar amounts to each of our grandchildren. Grandkids money goes into 529 or custodial accounts, money to our children goes into retirement accounts (when possible).

 

[OldShooter]

You can give more than $16 K, you just have to report it to the IRS as part of your lifetime gift allowance before you have to pay estate tax on the excess of the max allowance.

Yes. This seems to be widely misunderstood. At the Federal level, probably very few of us will looking at paying any estate taxes at all. In that case there is no issue with gifting whatever amounts one chooses.

 

[gauss]

If it me, I would consider maybe 50/(40/10) or something like that.

I don't think that anyone could argue that is unfair.

I don't have kids of my own, nor siblings so for me this is hypothetical.

-gauss

 

[Sojourner]

Fair is like beauty - it’s in the eye of the beholder. Each of the parties involved may (and probably will) see this differently and it is unlikely everyone will define “fair” the same way. It’s probably a good idea to make sure the givers - savory and spouse - are both comfortable with whatever approach is chosen. Agreement between spouses is more important than how the kids see it.

+1

 

[Time2]

My wife and are in a similar situation, except we paid $300k to get a child through Dental school and maybe $25,000 to get the other one through college. We also bought and gave a short term mortgage to the Dental student and her husband to buy their home. I have funded quite a few years of Roths for the college grad, but I hope to start playing catchup with him. If things work out, I might be able to buy him a house and then gift him back the payments.
How would I work that so I don't end up with income from the interest on a mortgage to him?

 

[RockyMtn]

You can give more than $16 K, you just have to report it to the IRS as part of your lifetime gift allowance before you have to pay estate tax on the excess of the max allowance.

This is true as well. I was simply replying to the statement that any gift more than $16k had tax implications. A married couple can give twice as much without having to deal with any gift tax implications, filings, etc.

 

[livingalmostlarge]

This is a great question one that I have considered with my two. But I am also one of 4 but I have 2 kids, my oldest 2 sibs have 3 kids and my youngest sib (#3) has only 1 child. So my parents didn't mean to and realize also my kids are substantially the youngest by a lot, gave a lot more to my oldest siblings. The trips were for a family of 5 instead of 3 or me solo. So I definitely got the least in relative dollar value paying for 1 person to go on family vacation instead of 5.

But at the same time does it matter? I don't think so but I've never asked the others. The discrepancy is quite large and sometimes mentally I feel guilty over my brother with 1 child. The older 2 sibs with 3 children each got less help in someways because my parents were less secure. And now they pay for more because they are more secure.

But my parents are also super conservative. They have not ever funded a penny for college for any of the grandchildren. Perhaps if they had it would be more obvious the discrepancy. But since they didn't it's fine.

I also feel guilty because DH has 1 siblings and his parents are comfortable. My BIL has no children and we've never received a penny from them including a gift for getting married or having children. But his uncle gave each of our kids 2 shares of apple stock at birth like $500 each. but that's something BIL hasn't gotten and it doesn't appear he's planning on getting married or children (but he's only 43 so he has time). Anyway I do wonder what his parents will do? My suspicion is 50/50 since we haven't gotten any help and it will be completely fair since then DH will give to the kids out of his share.

But it might be moot. If we do well we'll likely gift his brother some money annually.

 

[N02L84ER]

My in-laws had 2 sons and 2 granddaughters. They split their money 40%/40%/10%/10% for the son/son/GD/GD. So each son "gave up 10%" for a daughter or niece. I thought that was pretty fair.

 

[friar1610]

We have a similar situation to the OP. Two daughters. One married with 3 daughters. The other single/childless. Our estate plan has them sharing everything 50-50 even though the married daughter and her husband likely have more assets (and greater expenses). We’ve made no really large financial gifts to either as we want to make sure we won’t become a burden to them down the road. We’ve been contributing annually to 529s for the three granddaughters. This year the single daughter is planning a European vacation. So we gave her a birthday gift that will cover all/most of the trip. Don’t know how we’re going to play things going forward. We’re not going to keep a spreadsheet but we’re going to try to maintain some sort of rough equivalency between married daughter/family and single daughter as far as money gifts go. No perfect solutions.

 

[Mark1]

I know in our case (DW and I), much of estate is ear marked for siblings and nieces and nephews, since we have no children. The siblings all get the same percentages regardless if they had kids or not, so they too are kind of getting screwed.
No one said life is fair.

DM's estate is similar with same percentages to kids/grand kids as beneficiaries, so I'm kind of getting ripped too. It doesn't bother me in the least.
Full disclosure, I'm kind of big in terms of needs testing and I don't need the money, so take my lack of resentment with a grain of salt. Also, if your DD makes 30K a year and DS makes 300K a year, then I have more of a problem with your gift plan.

 

[skipro33]

My conscience would guide me to give equal amounts to both my sons and their wives. I consider my daughters-in-law as much my children as my sons. At least we treat each other that way. So I'd gift all four of them equally. If only one was married, I'd still give each an equal distribution. Regarding grandkids, I consider that a separate issue and would gift each grand child an equal distribution. If it's a significant amount, I'd gift it though their parents so they could help the child manage the money. In the past this has always worked well with no one feeling slighted. Sometimes a parent will set aside the grand child's gift towards their education because of financial gifting from other relatives. Not my business. It comes with no strings.