That’s my understanding, though I outsource my estate planning, and couldn’t say for sure. It’s still a ways off for us.
I think you only need to file Form 709 for gifts in excess of the annual limits. I filed it when super funding 529 accounts. The form was slightly confusing but so are many other IRS forms.
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Just trying to stick to the rules 
. You can see from some other threads what I think about the subject of gifting but it’s a single opinion. Though I totally respect the other viewpoint as well.
Trappings of wealth etc…not my view and I don’t care whether it’s a falsehood or not. Not sure why you didn’t just reply to that post as it has nothing to do with mine.
Yep. I was not familiar with this form, but presumably this is how the IRS keeps track of how much you have gifted during your lifetime (over and above the annual limits). Thanks for posting!
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Will agree to disagree @htas. I am merely describing our situation. Not commenting on others. Perhaps you misread .
We opened investment accounts for both our boys within a month of each being born, and we have been making contributions for them each month to pay for college. Any money left over after they complete their bachelors is there for them to use toward a grad degree, starting a business, or purchasing a home. We have made clear that the money is there for them to build their future and is not “fun money”. If they can minimize the cost of their undergrad education by attending a state university or earning merit aid (as Thing #1 did), then there is more left over for grad school, starting a business, or buying a house. Outside of this contribution, I doubt that we would write a check to help with a house.
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As an aside, older s just cashed in the last of his series EE savings bonds that he had ( from birth gifts and bar mitzvah) to contribute to his purchase. He’s holding the I bond.
Wow, you must’ve saved a lot. When our oldest was born the financial planner said to save $750/month for college. Figured it out as cost would be $350K ( for private). College cost is pretty darn close to that number. So the planner was right.
I like how you carved out that it was future money and not fun money. I’ But I like how in your scenario that they can chose what they want.
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Speaking of investment accounts, my daughter opened a Roth IRA when she started working 4 years ago. She’s already put aside a tidy sum (recent setbacks notwithstanding) from income subject to very low tax liability. She can use this penalty-free for buying a home in the future.
How is this relevant to the current conversation? She undoubtedly wouldn’t be able to save this much if she were responsible for any of her tuition, or for her car/gas/insurance needs. Her ability to show financial responsibility for her future in this way comes from our ability to subsidize her current needs in other areas. I’m OK with that balance- now and in the future
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For very wealthy people it makes sense to gift early because the asset will grow outside of your estate. For not wealthy people it is better to gift when you pass because you may just need that money — imagine this level of inflation for a few more years. For those that are concerned about kids not gaining the right values while growing up — it doesn’t hurt to tell the kids that you actually have nothing to give. And credibly signal this through how you live. Your need to gift them something will reduce if you also share with them the value that money is not an unimportant thing in life and they should plan for it. Starting with career choices and ending with spending habits. And making sure SO has matched outlook in life
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Rather than lying about our net worth, we’ve chosen to simply not discuss the specifics of it with our daughter at this time. She knows we value both hard work and the ability to responsibly enjoy the fruits of one’s labor while caring for others. I have high hopes she’ll grow up with those values as well- whether they are “right” is of course subjective!
I have an only child and no secrets about money. She’s still frugal. Depends on the kid.
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For people living in a HCOL area, that statement is often not very far from the truth :-). I didn’t mean to suggest that one lie to one’s kids. You have potentially another 30-40 years to live post retirement, with long term care and other needs. Kids should be happy if they didn’t need to help us with money in our old age. We know what is the state of SS and Medicare the way things are going.
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The costs of moving in retirement and potentially long term care costs down the line keep me from wanting to gift really large sums now. Both sons are doing well financially and have never asked for any major financial help post college. We do okay but are not wealthy, got very little inheritance when our own parents died. A couple of them could have ended up needing financial help from their children if they had lived much longer. We really hope to not need financial help from our children down the line. We would help now in an emergency or to help with extras if we have grandchildren, and definitely hope to have something left for them at the end!
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Truth. I would strongly suggest taking all that into consideration well prior to any large gift, hopefully with the input of a trusted financial advisor and during the process of estate planning.
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Early on we paid $500/month to each, plus work bonuses. After selling a business, we upped the contributions. Rather than just buy bonds or park money in savings accounts, we invested so the boys benefitted from the stock market growth. We treated saving for school and our own retirement like it was another bill, comparable to utilities or insurance.
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Truthfully, if I could afford it, and it wouldn’t affect my lifestyle today or in the future, I wouldn’t hesitate to invest in my D’s future, and if buying a place for her to live happily is part of that, then so be it. I can’t take it with me, and it would make me feel happy knowing she had a place to call home.
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I would rather have my kid pay for something he owns each month than pay a landlord, so sure, if I could help, I would.
I would also hate to tell him “but if it turns out that I outlive my money because of this, plan on making the room in the back mine.”
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40 years ago I was on the “receiving” end.
Fresh out of college, I had higher income than my Dad, but not quite enough assets, not much of a credit history,…
My parents loaned me enough to make the down payment for a Condo, at no interest. I was able to pay them back quickly.
I was able to get a substantial tax benefits (by opting for high points), making my monthly cost essentially the same as renting - but instead building my equity, and at an early age.
So yes, I would certainly do the same for my daughter. Any better-quality home she can afford, any PMI she saves, or better loans/terms she can qualify for, means money that stays in the family rather than enriching a third party.
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