Gifting to Children

[Stormy Kromer]

That's a really good point. As the son who "did well" while my brother STILL lives with my parents and has made it clear he expects to inherit everything and continue living there when they die, I've been made a bit sore on this subject. I haven't spent much time talking to my kids about this but made it clear I'm not subsidizing bad behavior. But yeah, if one is being just as responsible as the other and is just way behind, that may weigh on my decision. We do plan on transferring wealth before death, but seeing as my kids are teenagers it's a bit away...

I understand completely and couldn't agree more.

 

[sengsational]

Fund the 529 as a pool?

You give 50/50 to each kid outright, and separately toss an amount into a 529 that you set up for "whoever" as beneficiary. You could make yourself the beneficiary for the time being. If the single daughter eventually has kids, you manage the beneficiaries when they're in high school. You can slice and dice beneficiaries without tax consequences. If the single daughter is destined to not have kids, then the fairness can be addressed later. Kick the can down the road!

 

[aaronc879]

If you are giving the money directly to the grandkids then I don't see a problem. I don't consider that to be giving more to one kid than the other. You are giving a certain equal amount to each kid then giving more money to the grandkids who are separate people. The kids are still getting the same amount. The grandkids money isn't their parents money. I don't see the conflict.

 

[youbet]

If you are giving the money directly to the grandkids then I don't see a problem. I don't consider that to be giving more to one kid than the other. You are giving a certain equal amount to each kid then giving more money to the grandkids who are separate people. The kids are still getting the same amount. The grandkids money isn't their parents money. I don't see the conflict.

+1

I think the same way aaronc879. My legacy plans consider kids and grand kids as individuals. For example, if I had four kids and eight grand kids (I don't), that would be twelve buckets to think about funding, each on its own merits. They would all be considered in my legacy. My actual situation isn't that complicated however......

Another thing to consider is which kid or DIL/SIL or grand kid has been loyal and attentive to you over the years. To me, that's a really important factor. It's so sad to hear of a caregiver who isn't rewarded because the care-receiving parent feels to do so would be "unfair."

 

[ncbill]

That's a really good point. As the son who "did well" while my brother STILL lives with my parents and has made it clear he expects to inherit everything and continue living there when they die, I've been made a bit sore on this subject. I haven't spent much time talking to my kids about this but made it clear I'm not subsidizing bad behavior. But yeah, if one is being just as responsible as the other and is just way behind, that may weigh on my decision. We do plan on transferring wealth before death, but seeing as my kids are teenagers it's a bit away...

If last-to-die parent's estate specifies a 50/50 split, just boot him out so the house can be sold when settling the estate.

That's what an old college roommate of mine did to his younger brother who had spent his life sponging off of their mother...roomie would never even say his name so I still don't know it.

And make everything clear to your kids.

I had one parent who jerked us kids around on money issues, making promises that hindsight showed they never intended to keep, so I make sure I'm honest with my kids.

 

[Sunset]

Wait a second the OP was asking about funding for grandkids not about rewarding someone for bad behavior. Maybe one kid is working hard with special needs children and the other is a Wall Street banker. What would have the "poor" child do? It's not always about the total amount of money you make.

I was just making a fairly personal viewpoint known, and not trying to solve the issue for the OP.
I saw some comments about rewarding the poor performing child more than the one who was doing fine, and wanted to input how it felt to me to see bad reckless behavior rewarded.

 

[Joylush]

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.

What is “fair” in my opinion is to treat the two children equally. This is exactly what I do. I don’t favor one over the other because one has more kids, or no kids, a better job, saves better or is more or less responsible. The only exception I would ever make is if there was truly special needs family member who was not capable of providing for themselves.

Gift each child equally. If the one with the kids wants to save some for their kids’ education, so be it. The other may choose to save it for their future kids’ education. Presumable the one with the kids also has a second income which the other may not. Do you give the one whose family income is higher less and penalize their success? Where does it end? If you want to do equal, do equal. Truly equal is giving each child the same thing regardless of anything else.

 

[ncbill]

Always equal gifts/inheritances...even if a spendthrift trust is needed for one kid but not the other.

The Beyond the Grave book made it clear that kids view unequal legacies as "why didn't mom/dad love me?" & such can easily drive a permanent wedge between siblings for the rest of their lives, long after both mom & dad are gone.

 

[rayvt]

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.

I solve that problem by not letting any of our kids know about when, amount, or even if any of the other kids receive any money from us. They can probably assume that their siblings got something, but that's it. They can guess all they want...be I won't tell them or even discuss it with them.

We had one daughter in law ask us one year about when our annual gift (that they had been getting for the last 5-6 years) would arrive, because it was late and she had budgeted that money. OOPS!!! That was the last she got anything for the next several years.

 

[samcat]

We are splitting everything (inheritance) 50/50 with our two boys. We plan on gifting to them the same amounts if we ever do that. I recently had something happen in my family that was way out the ordinary and have told my husband that we will never treat our kids differently and if we do for some odd reason, we are going to tell the other one what we did. I would never want one child to think that we gave more to his brother without an explanation or tried to hide something.

As for future grandkids, I will think of them totally separate from their parents. If one has three kids and one has two and I want to give of them each $1k in a 529, I am gifting it to my grandkids, not their parents. Though I would never give the grandkids $16k each as a gift and think that was fair...that is way too much of a difference for me.

I think of the grandkids the same for larger gifts as I do for birthday gifts. If I give each $50, then each one gets $50. They are each my grandchild (this is if and when I ever have grandchildren!).

 

[HMMY]

If you want your children to have a good relationship when you're gone, what's important is that whatever you do doesn't create ill will between them and they accept it as "fair."

 

[samcat]

If you want your children to have a good relationship when you're gone, what's important is that whatever you do doesn't create ill will between them and they accept it as "fair."

Exactly!

My FIL and one of his sons (4 kids) had a falling out years before he died. My FIL wanted to leave three kids 30% and one kid 10%. When we were redoing his will/trust, I talked him out of it. Everyone received 25%. It was not worth three kids receiving 5% more for him to try to punish the one black sheep.

I don't know if the black sheep would have ever known but if he did, it was those of us left who would have to deal with the fallout...not my FIL. And, 9 years later, the kids are still friends.

 

[WhenIsItTime]

I'm a capitalist who retired early. I don't believe much about life is fair.

Do you raise your kids like a game of checkers or chess? I think there are many circumstances deserving differing gifts and as many ways to make it happen.

 

[jollystomper]

Always equal gifts/inheritances...even if a spendthrift trust is needed for one kid but not the other.

The Beyond the Grave book made it clear that kids view unequal legacies as "why didn't mom/dad love me?" & such can easily drive a permanent wedge between siblings for the rest of their lives, long after both mom & dad are gone.

I agree with this totally. Our children are different, and have varying degrees of handling money. But We do no see the point of agonizing over how to divide up gifts and inheritances. We have gifted equally, and our will is set up to do that as well.

Interestingly, our parents did not gift to my siblings and I equally. But we are close, and our parents explained their reasoning while they were still alive. The cash and investments were split equally, but they set the proceeds from the house sale to be split 20% each to my sisters (3) and 10% each to my 3 brothers and I. Their rationale was that their daughters might face greater challenges in the world that would impact them financially than their sons. My brothers and I were fine with that.

 

[Exwallstguy]

My parents

I think gifting towards need is equally important to consider. I am well off, my siblings are not. I spoke to my parents and because it brings them joy, they will gift my kids money and my siblings and not much to me. One sibling will get prob 60%, another maybe 10%, and grandkids prob 30%. If siblings are of equal means I would think it very odd not to gift more towards the one kids as 1. Greater need as kids are expensive 2. As a grandparent id imagine you would WANT to leave something for them.

 

[piccolopat]

Your children and your grandchildren are different people. Also gifting to the grands is not the same as giving more to one sibling than the one with no kids. I would gift each child the same dollar amount. For the grands, I would gift each of them equally but in a way that can only be used by them and not by their parents.

 

[WhenIsItTime]

I'm a capitalist who retired early. I don't believe much about life is fair.

Do you raise your kids like a game of checkers or chess? I think there are many circumstances deserving differing gifts and as many ways to make it happen.

I think gifting towards need is equally important to consider. I am well off, my siblings are not. I spoke to my parents and because it brings them joy, they will gift my kids money and my siblings and not much to me. One sibling will get prob 60%, another maybe 10%, and grandkids prob 30%. If siblings are of equal means I would think it very odd not to gift more towards the one kids as 1. Greater need as kids are expensive 2. As a grandparent id imagine you would WANT to leave something for them.

I should add, I have similar situation where I am retired and my siblings are not. I requested my mother to change her will to either give my share to my siblings or skip to my kids as she so desires. I don't need more money towards my own estate tax limits. This seems fair to me.

 

[Joylush]

I should add, I have similar situation where I am retired and my siblings are not. I requested my mother to change her will to either give my share to my siblings or skip to my kids as she so desires. I don't need more money towards my own estate tax limits. This seems fair to me.

I think I would just rather be treated equally, take my share and then decide to gift it as I saw fit at the time. The only way I would opt to do it another way is to save on taxes.

 

[Koolau]

I would say my parents gifted to the kid that needed it at the time. Big gift to me was help with first house. Even with a good salary, it was difficult at the time to get started due to down payment. Later on, parents helped younger sister with living expenses as she was nearly destitute AND the only one at the time with grand children for my parents. Eventually older sister went through divorce and needed a lot of help (also grand children at the time.)

I never asked how much each kid got but as the eventual "parent" to my parents as they slowly became dependent upon me, I realized that I had been gifted the least. I held no resentment as 1) It was their money to do with as they chose. 2) It was clear my other siblings needed help at a time when I did not. 3) When I DID need help, mom and dad helped me.

In the same way each growing child needs more or less attention at various times in their growth (more help with homework perhaps and less help with sports, more help with emotional needs and less help with intellectual growth, etc.) each adult child may have different needs (at different times) as time passes. Keeping track or slavishly being equal may cause as much resentment as helping the one in need at the time of need.

We all have to play this the way we see it. My bias is to do it the way my parents did - help the one in need at the time (without enabling bad behavior, of course.) Very much a YMMV situation.

 

[MarieIG]

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.

The important thing is that you and your spouse agree on what to give. Right now, you agree on a 50/50 gift so do that. If later both spouses agree on a 529 the issue can be revisited. In any event, when there are grandchildren, money tends to be funneled in their direction, i.e. buying clothes, diapers, toys, books, food, school supplies, taking them on little trips, activities, etc. . . Also, you can always pay tuition directly to the institution w/o tax consequences, IIRC.

 

[kgtest]

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.

Depends. My DS and I are getting a 50/50 split. But I married up and so did my DS but just not as high up. Since DS has more expense maybe it is more fair...on the other hand you also have the in laws that could gift to the DS and DDIL vs DD is single and does not have an in law but also less expenses. Either way I am sure the kids will be delighted to know they are getting gifts. I would do 50/50 or equal gifts to each.

 

[brett]

Neither of our two children know what we have given to, or helped the other one out.

No need for them to know. Nor do they care. What they know is that we are able to help them when they need it.

Fail does not mean 50/50. It means what the giver thinks as fair. Bottom line is the Golden Rule. He who has the gold makes the rules.

 

[WhenIsItTime]

For all the "equal gifters", how do you handle differences in age?

My brother is 4 years younger. If we get the same value money from our parents at the same time then we are not equal, because he gets access 4 years sooner.

I noted previously, I'm FI and instructed my parents to exclude me. No issue in my exact case, but part of reason I don't like the equal approach.

 

[Joylush]

For all the "equal gifters", how do you handle differences in age?

My brother is 4 years younger. If we get the same value money from our parents at the same time then we are not equal, because he gets access 4 years sooner.

I noted previously, I'm FI and instructed my parents to exclude me. No issue in my exact case, but part of reason I don't like the equal approach.

Haha! Good one. I’m from the “always equal” is the best way side. Then again I have twins so the age difference does not come in to play. To you I would say the fact your brother is four years younger is evened out by the fact you got to know your parents four years longer. You had four years of one-on-one time on top of that he didn’t have.

I am pretty much 50/50 is the best way to go with the exception perhaps of a special needs child. I’ve seen too many cases of the responsible child getting shorted due to having a full capable sibling who refuses to or fails to thrive or otherwise seems to constantly make bad choices. Just as I won’t short the one (as painful as it might be) who would be wasteful with what they are given. I suppose if I had a case like that I might split their share among them and their children but I wouldn’t give them more just because they had children.

And for those who think they give to one and the others don’t know about it, I think that may be naïve thinking.

 

[ivinsfan]

For all the "equal gifters", how do you handle differences in age?

My brother is 4 years younger. If we get the same value money from our parents at the same time then we are not equal, because he gets access 4 years sooner.

I noted previously, I'm FI and instructed my parents to exclude me. No issue in my exact case, but part of reason I don't like the equal approach.

That's a head spinner...following it to it's logical conclusion, your brother could die and his share could go to his kids who are way younger. There is a huge difference between dividing things equally and showing one child favoritism with money issues. I think most mature adults understand this concept. So answer your question I ignore it.