Gifting to Children

[chris2008]

If a child wants to feel treated unfair, it will.
Child 1 receives a gift for a downpayment. At that time it is 1/2 of the parents net worth. Years later the other child receives the same amount, but now it is only 1/10th of the parents net worth. Fair?
And even worse, if you want to feel it: now the house is worth more than ever before.

I would vote for treating children equal and fair, but I am happy to be an only child...and without kids...

 

[Koolau]

I think I've mentioned before that we plan to gift to the kids while we are alive. In our wills, most of our remainder will go to our favorite charities. We've never shared with the kids our exact financial situation, but they must have a reasonable idea based on our life style. We HAVE shared with them our estate plan (in general terms). There will be some for them but most to charity.

We helped them to become independent. We insured that they got advanced education. We helped with house down payments, etc. We believe the bulk of our financial responsibility to them is complete. Making them (almost) millionaires upon our deaths does not appeal to us. Very much a YMMV situation.

 

[Maidensong]

No Ethicist but ...

I'm the exact opposite of a socialist, but in this case, the "to each according to his/her need" makes sense to me. If I were blessed enough to have grandkids, I'd want to do something for them separate from what we gave their parents.

That said, I'm also okay with extending this principle to my siblings as well. My parents do not have to keep things exactly equal to satisfy me. When one of my sisters found herself in a dangerously abusive marriage, my parents drove to the state where she lived, packed her and her kids up, and brought them back to the town where they lived. They even bought a small house for her and her two kids to live in for a couple of years while she found a job, got the kids settled in a new school, and rebuilt her life. They sold it once she was free and ready to move to her own place.

Did I mind? Did my other two sisters feel left out? No. We were delighted that my folks were financially able to do this for our youngest sister. Given the abuse that was happening, they probably saved her life.

OP--if you're concerned that your childless daughter will object to your generosity to your grandkids, I advise you to not let your right hand know what your left is doing.

 

[Exchme]

We set up a 529 for the grandchild over a couple of years where our contribution totaled about 1 year of college at an in-state university. If it grows faster than education inflation, it will go further.

Aside from that, we give equally to each child. We decided to gift shares to encourage them to leave it alone to grow, plus that way we don't have to take any capital gains on it. Which shares to gift becomes a whole other thing to optimize. If the step-up basis on death remains in place, you don't want to gift your shares with the highest appreciation and it would be self defeating to gift shares with the lowest appreciation (or losses), so you have to pick the porridge that is just right.

 

[Koolau]

I'm the exact opposite of a socialist, but in this case, the "to each according to his/her need" makes sense to me. If I were blessed enough to have grandkids, I'd want to do something for them separate from what we gave their parents.

That said, I'm also okay with extending this principle to my siblings as well. My parents do not have to keep things exactly equal to satisfy me. When one of my sisters found herself in a dangerously abusive marriage, my parents drove to the state where she lived, packed her and her kids up, and brought them back to the town where they lived. They even bought a small house for her and her two kids to live in for a couple of years while she found a job, got the kids settled in a new school, and rebuilt her life. They sold it once she was free and ready to move to her own place.

Did I mind? Did my other two sisters feel left out? No. We were delighted that my folks were financially able to do this for our youngest sister. Given the abuse that was happening, they probably saved her life.

OP--if you're concerned that your childless daughter will object to your generosity to your grandkids, I advise you to not let your right hand know what your left is doing.

You and your family chose to react to a developing/ongoing situation. Socialism is when the gummint says "Here is how you must handle it." Just a quick clarification as nothing was "imposed" on you/family by anyone else. YMMV

 

[marko]

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.

While I have little to add to the OPs question, this gift issue is, IMO, one of the more misunderstood items.

I have been told, sometimes with great assurance that "you can't gift more than $x", knowing full well that I can gift as much as I want.....millions if one were so inclined. The tax implications are almost a separate issue and for many/most people not an issue at all.

 

[EastWest Gal]

My dad gifted the max without tax reporting to his grandchildren’s education. My sister has two, I have one. Her need was greater, as had had a NW of about $1M 18 years ago and she was struggling. Honestly, it was me sitting with him and an estate lawyer, both of us, demanding that he do this! He was old, widowed, wealthy and frugal (more like stingy), with serious illness when he finally started gifting to 529 plans.

I’m gifting my son $15K/yr in ETFs and mutual funds in an after-tax portfolio. He can sell if he needs the cash.

 

[gayl]

I guess I'm not 'fair' according to a lot of people but here's what I've done / do:
Estate: house 50/50 to DD & DS. Schwab equal between all 6 GKs & 2 kids. 12.5% each.
Now: 1k to DD & DS for birthdays & all holidays. $100 to 3 older grandchildren, $20 + wrapped present to 3 little ones (pre-teens).
135k to bail son out of divorce (yep that's what the judge ordered and he would've had to sell everything to come up with it). Cars & down-payment to DD. Now he has repaid some but has still gotten 19k more than her to date. I keep a spreadsheet. Also Roth starters for everyone on college graduations.
Vacations: don't keep track. Don't care that her 'side' gets more as she has 4 kids to his 2. What grands get don't factor in


BTW : kids don't think I'm exactly broke but know I live on pension & gift SSA. Think that + house is basically all I have [emoji28][emoji1787][emoji23]

 

[Sanstar]

Gayl,
Very much what we’re doing. DS and DIL imitated divorce proceedings last month. Very acrimonious, 3 yo DGS custody battle. I expect $30k- $50k to DS for his attorney fees. Trying very hard to stay in my lane. Miserable time for our family right now.

I expect to save $ in the long run w/o covering DIL mental and physical health and vision expenses, new car for her plus, repairs and maintenance, $40k school loan pay off, $1k on her b’day and their anniversary, airline tickets so they could go visit her family every year.

Will keep up the $1k and holiday $gifts for other 3 adult kids and grandkids.

And I keep a spreadsheet. I don’t expect to rebalance each kid every year but do want to be able to level them out in the future if it becomes important to me. They all take the position of: it’s my $ and I should share or not; spend or not w/o concern for “fairness” between them.

 

[gayl]

Gayl,
Very much what we’re doing. DS and DIL imitated divorce proceedings last month. Very acrimonious, 3 yo DGS custody battle. I expect $30k- $50k to DS for his attorney fees. Trying very hard to stay in my lane. Miserable time for our family right now.

I expect to save $ in the long run w/o covering DIL mental and physical health and vision expenses, new car for her plus, repairs and maintenance, $40k school loan pay off, $1k on her b’day and their anniversary, airline tickets so they could go visit her family every year.

Will keep up the $1k and holiday $gifts for other 3 adult kids and grandkids.

And I keep a spreadsheet. I don’t expect to rebalance each kid every year but do want to be able to level them out in the future if it becomes important to me. They all take the position of: it’s my $ and I should share or not; spend or not w/o concern for “fairness” between them.

You have my sympathies. Miserable time. It'll balance out in the long run .... definitely not each year.

 

[pacergal]

Gayl,
Very much what we’re doing. DS and DIL imitated divorce proceedings last month. Very acrimonious, 3 yo DGS custody battle. I expect $30k- $50k to DS for his attorney fees. Trying very hard to stay in my lane. Miserable time for our family right now.

Been there, done that. DS fees were >$50k for the divorce, and still ongoing occasionally, because Ex DIL is a narcissistic A**Hole, keeps drumming up lies about DGS care. Judge finally told her to stop, told her to get help (but unfortunately did not rule her too) and said doesn't want to see them back in family court for at least 6-7 years.

Sigh.
We are grateful we have been able to help financially.