How to gift to Children ??

statsman said:
I've observed too many instances where adult children are expecting gifts from their parents, and they become annoyed when the gifts don't arrive on a certain, usually yearly, schedule. These children start pulling away unless they are "bought", especially if they believe they are locked in as the inheritors of their parents' estate.

Some parents will start to honestly assess their relationship with their adult children, and many find out it isn't as close as they thought it was or would like it to be. That's a tough situation to be in, especially if there are grandchildren involved.
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Well, sometimes one kid is a Black Sheep and the other is not.
*shurg*
 
TheWizard said:
No stepped up basis when you do that, of course.

My plan is to give excess cash that otherwise would go into my taxable brokerage account.
Perhaps not as much as some folks would give, but retaining the already invested ETFs for eventual stepped up basis...
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Yeah, giving up stepped-up basis seems potentially very costly to the recipient.
 
Koolau said:
Yeah, giving up stepped-up basis seems potentially very costly to the recipient.
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I'm not sure that giving anything like cash or investments would be considered very costly to the recipient. Our taxable and Roth is about 2/3 of the portfolio. Each year's gift is about 1% of the portfolio, and some of it is cash. Even if we live to 95, most of it will be inherited with a stepped up basis anyway.
 
gauss said:
If all the kids (along with any other trust beneficiaries) agree, couldn't they fire the trustee and hire one more appropriate?

I was under the impression that "irrevocable" trusts could be modified if there is 100% agreement among the beneficiaries.

Regarding the trustee complying with your wishes, I am anticipating the following strategy:
  1. Use a Corporate trustee such as Charles Schwab or Fidelity - not a sole practicing attorney or administrator with no real oversight.
  2. Ensure that the beneficiaries understand (via written instructions also verbally reviewed with them) what is expected under the Trust and how to take action (either legal or trustee change) if compliance is not occurring.
I think there are others here that know more about this than I do and would welcome their insightful comments.

-gauss
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This is where a Trust Protector comes in. We use Charles Schwab Trust Company as our trustee when we’re gone. Our sons know if they aren’t fulfilling their obligations according to the trusts, they can approach our law firm who is appointed as Trust Protector and can appoint a new trustee. They also cannot self appoint themselves.
 
Dash man said:
This is where a Trust Protector comes in. We use Charles Schwab Trust Company as our trustee when we’re gone. Our sons know if they aren’t fulfilling their obligations according to the trusts, they can approach our law firm who is appointed as Trust Protector and can appoint a new trustee. They also cannot self appoint themselves.
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May I ask what Charles Schwab Trust Co. charges for their services? I'd really like to have a trust company manage whatever remainder trust we have. BUT I know from the kid's experience with the trust the grandparents set up, the trust company can extract a huge amount without doing anything of value.
 
We’ve found ourselves giving with a warm hand satisfying. We gift in a variety of ways. It began by passing down our cars when we purchased new. A few years ago we started giving cash at Christmas when our first grandchild was born. We opened a 529 plan for our new grandson. The next year our other son and his wife had twins. They were in a tiny Philadelphia apartment, so when our rental became vacant, we let them move in there. Next we bought them a new car with all the latest safety features to drive the twins around. We opened 529 accounts for them. Next we opened custodial brokerage accounts for each of the grands. When our younger son indicated he and his wife would like to move closer to us so their son could grow up with family around, we offered to buy them a townhouse to live in. They moved here with job transfers two months later. 😃
Next, a nephew with two kids passed away. We opened 529 accounts for them. We also opened a 529 for another newborn niece whose mom is very close to us.
This past Christmas we took a different approach and gifted highly appreciated stock to our sons, and to DW’s siblings. For us to sell the stock and give cash would have cost us 26.8% in taxes. So we gifted stock with a bit more than planned to cover taxes if needed for them. We knew their taxes wouldn’t be as bad.
Lastly, we’re currently passing on two cars to one son and our daughter in law. We told them this is in lieu of this year’s Christmas gift. We’ll see what really happens in December.
Koolau said:
May I ask what Charles Schwab Trust Co. charges for their services? I'd really like to have a trust company manage whatever remainder trust we have. BUT I know from the kid's experience with the trust the grandparents set up, the trust company can extract a huge amount without doing anything of value.
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Here are the fees published on their website:
 
I too worry about the chances of spoiling the children with these gifts with warm hands.
The other option is to leave them a large inheritance when we pass away.
The children will possibly be in their 50s - 60s when we kick the bucket, will the dough be as helpful to them then.
Apart from giving to the charities, something has to happen with our savings.
We cannot possibly spend it all in our life times.I know it is a first world problem, with few answers, give to the children either now or later.
May be some now & some later.
 
The experiences angle can also be a net negative if, when the group gets together, there is friction. I tried the all expenses paid trip and it fell into the "no good deed goes unpunished" category. Thankfully , I think the group has chilled on each others faults. But still, I don't think I'll try the coordinated travel thing again unless it's somebody else's idea. I've already given no-strings money and if we think they'd enjoy an adventure with us, we invite them, and they can decide to spend it travelling with us or use it for whatever they think is best for them.
 
sengsational said:
The experiences angle can also be a net negative if, when the group gets together, there is friction. I tried the all expenses paid trip and it fell into the "no good deed goes unpunished" category.
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Agree.

In the book Die With Zero the author invites everyone on a big vacation with the only caveat being they are available for a big dinner, all together. Otherwise they can do what they want.

My mother and her husband (my stepfather) wanted to take the entire family on a cruise many years ago. It conflicted with our kids activities and we declined, under much pressure. My mother is an only child used to getting her way. Truth of the matter, we don't care for her husband and knew the trip would be flaunted years later. As it turns out, we were right.

This gifting stuff is hard.
 
We also enjoy sharing what we worked for with our children and grandchildren while we’re still here, but do so on an as-needed basis. We’ve helped each one buy homes and pay for family vacations when we can all get together. We’ve also started 529s for the grandkids and encourage their parents to contribute. We don’t have any regular transfers of wealth, but that’s just how we’ve chosen to do it. All of our kids know that we’ve done ok and that we’re here in the event of a financial emergency. None have ever asked and in fact, didn’t ask for help with home purchases. That was something we offered.

There may be better ways to structure things better from a tax perspective, but I haven’t spent any time on that.
 
TripleLindy said:
We also enjoy sharing what we worked for with our children and grandchildren while we’re still here, but do so on an as-needed basis. We’ve helped each one buy homes and pay for family vacations when we can all get together. We’ve also started 529s for the grandkids and encourage their parents to contribute. We don’t have any regular transfers of wealth, but that’s just how we’ve chosen to do it. All of our kids know that we’ve done ok and that we’re here in the event of a financial emergency. None have ever asked and in fact, didn’t ask for help with home purchases. That was something we offered.

There may be better ways to structure things better from a tax perspective, but I haven’t spent any time on that.
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I love the fact that that my family has never asked us for money. We are more generous because of it!
 
The last few years, on OUR anniversay, we gift some cash to our 2 children. We remind them that it's not a given, so don't spend it before we write the check. Both kids are doing great financially, but it's always nice to help them a little. We don't give a huge amount, but it would make financing a vacation a little easier, or a small update in their homes (a piece of furniture, new flooring, etc.) They are always thankful and have never asked if they are getting our anniversary present that particular year.
 
Koolau said:
Thanks.

Add 'em up and pretty soon you're talking "real money." Seems that if it doesn't move, they charge a fee to even add it to their list.
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At 0.5% annually (w/$5,000 minimum) it seemed like a good deal to me -- especially if the assets are distributed quickly and the trust wraps up within a year.

I think Fidelity has a somewhat similar offering too.

-gauss
 
gauss said:
At 0.5% annually (w/$5,000 minimum) it seemed like a good deal to me -- especially if the assets are distributed quickly and the trust wraps up within a year.

I think Fidelity has a somewhat similar offering too.

-gauss
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I'm with Vanguard. Anyone know if they have similar trust dept.?
 
rkser said:
I also hope I do not want to ruin them by gifting to them, although they are well grounded so far, but only future will tell.

We would like to gift them now when they could use the money on their growing families, giving with warm vs cold hands.

They will also have a reasonable inheritance when we pass, but that may come in another 15 to 20 yrs.
The children will be in their 50s - 60s and they may not need the money as much at that stage, although with the Step Up (Taxable Accounts) will not have to pay taxes.

Lot of questions in our minds, I know it is a first world problem.
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I really respect your desire to start off giving to the kids now and not when you are gone. I am in my 70’s and still haven’t inherited until my father’s wife passes away who is now 95 yrs old. I don’t need the inheritance in my 70’s. What would have been awesome would have been to be given larger gifts when we were young and raising our sons, when it would have really made a difference .
My husband and I take all our kids and grands and spouses on a big trip every year so they have memories as well as an inheritance. We just got back from Costa Rica , visited Tabacon Resort in the Rain Forest at the foot of the volcanos and had a blast.
Memories and inheritance create a legacy. I think you are 100% on the right track! Thanks for sharing. GLTA
 
Koolau said:
I'm with Vanguard. Anyone know if they have similar trust dept.?
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It looks like Vanguard also has a similar trust administration service (VNTC)-- with a base fee of 0.55%

Since I am only interested in finding a "successor trustee", I am concerned about the statement on page 2 of the first reference regarding "VNTC cannot prospectively accept a trusteeship". I don't recall seeing this in the Charles Schwab documents.


-gauss
 
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gauss said:
It looks like Vanguard also has a similar trust administration service (VNTC)-- with a base fee of 0.55%

Since I am only interested in finding a "successor trustee", I am concerned about the statement on page 2 of the first reference regarding "VNTC cannot prospectively accept a trusteeship". I don't recall seeing this in the Charles Schwab documents.


-gauss
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Thanks! That helps a lot.
 
gauss said:
It looks like Vanguard also has a similar trust administration service (VNTC)-- with a base fee of 0.55%

Since I am only interested in finding a "successor trustee", I am concerned about the statement on page 2 of the first reference regarding "VNTC cannot prospectively accept a trusteeship". I don't recall seeing this in the Charles Schwab documents.


-gauss
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Did a quick read and I think that it is not as bad as you might think..

It does seem that you can put them in as successor trustee when drafting and if they agree.. but my read is that you cannot just list them as successor without talking to them first... IOW, accept without doing due diligence ...
 
Texas Proud said:
Did a quick read and I think that it is not as bad as you might think..

It does seem that you can put them in as successor trustee when drafting and if they agree.. but my read is that you cannot just list them as successor without talking to them first... IOW, accept without doing due diligence ...
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Well that is a possibility. I would need to talk with them to see if they would accept a future role as successor trustee now. The language about they would accept it in a future date based on the terms in effect at that time, still makes me think that they are not committing to anything until they are actually activated to serve.

For another reason, I think that VNTC would be a no-go for me. They seem to not accept residential real estate. I know that Schwab will accept it. I am not going through all this trust hassle just to ask a nonprofessional to liquidate my primary residence.

-gauss
 
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