<p>I think it depends on the family dynamic. (I know in this situation the OP seemed to have come to a conclusion, but in case anyone else is reading this and is in a similar predicament). I can’t say I’ve been in this situation, as I’m only a high school senior, but from what my parents have told me, when I’m an adult, I should never hesitate to ask them for monetary help if I’m in a tight situation. Whether buying a car, a house, just getting by, etc. So if you belong to a family in which that is the sort of dynamic that exists, then you shouldn’t be afraid to ask.</p>
<p>However, I do agree that any money the kids get sent should be put aside for tuition/books, etc. And if the kids could get a job (I know some parents really don’t want their kids to get a job in college and would rather they focus on their schooling), maybe they could contribute a bit as well.</p>
<p>I agree with Hanna. My mother-in-law came from a well-to-do family and her father paid for my father-in-law (meaning his daughter’s husband) to attend medical school, which he wouldn’t have otherwise been able to do. That’s what people with money did back then, from the stories I’ve heard.</p>
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<p>I think it’s nice if it’s freely offered. We contribute every birthday and Christmas to a 529 plan for my young niece and would certainly help out when she goes to college. H and I have even discussed whether we wanted to just pay for our kids’ college out of current savings, leave the 529’s alone and let those be for grandchildren. But no one “sat us down” and told us we had to do those things. It’s not a gift if it’s extorted. And sitting grandma / grandpa down and telling them to cough up a nominal amount just doesn’t sit well with me. </p>
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<p>I’m fine that my parents’ and in-laws’ “legacies” to their grandchildren has simply been the time they’ve spent with them. Their legacy was that they paid for me / H to get good educations so that we could support our own children. Teach a man to fish and all, instead of buying the man’s children fish.</p>
<p>Gifts work best when they are the idea of the person giving them. The idea of “sitting down GM/GP” and “suggesting/encouraging” them to pay for the kids just feels so wrong on all levels to me. I will be forever grateful that our folks somehow were able to get all of us through college & grad school. I really want them to spend & enjoy their money while they are healthy enough to do so. </p>
<p>It is our duty as the parents to be sure that we help our kids get the educations they need and keep resources we/they have in mind to do so. Anyway, I agree the subject has been covered ad nauseum.</p>
I totally agree with this … the catch, for me at least, is when my parents are making decisions that most likely will give a bunch of their money to the IRS … in this case is a good thing or a bad thing if I nudge them towards seeking more estate planning (which likely would include making some gifts now)?</p>
<p>(PS - I am not, and never would, advocate giving the money to my sister or I … however I would advocate anything other than giving it to the IRS … spend it, donate it, leave it to other relatives, or leave it to us, etc</p>
<p>I honestly think the IRS could USE the money and see nothing wrong with some of it going there if the folks don’t need and spend it in their lives. Heck, it would help with some of the deficits that are increasing all the time. My folks don’t have assets over $5 million, so I don’t see the IRS gobbling up too much of their assets.</p>
<p>Care can really run into a LOT of money, especially when an aid is needed and/or medical care and/or patient has dementia and/or is violent, non-ambulatory, blind, etc.</p>
<p>I can attest to HImom’s posting. My spouse is in a NH and the cost is over $9,000 month. The process of qualifying for financial assistance meant that our assets were required to be used for that expense, except for a spousal allowance.</p>
<p>People have said that we should have “given it away” first (mostly people who think that their parents should give them assets before a nursing home can get their parents’ money). Aside from the ethical issue of whether it’s appropriate to try to avoid paying for your own medical care, there’s a 5-year look back period for all transfers of assets. We were required to identify any gift or transfer of an asset in excess of $500. (FYI our college savings for our children and the kids’ 529 accounts were counted as available assets that could be cashed in an used for my spouse’s care - something to think about if a grandparent retains college savings for grandchildren in the grandparent’s name.)</p>
<p>If we had given $1,000 away, that $1,000 would be deducted from the eligibility for medical assistance. Try getting gifts returned if you’re in this boat, and being billed $9,000 per month!</p>
<p>My point is that once people get into their 60s and 70s, they might appropriately be worried not only about whether their money will last for both of them through retirement but whether they can safely make larger gifts anymore. I learned the realities of NH billing and the Medicaid system the hard way, and much earlier than most people. I think that most families don’t give this a thought, since they don’t ever expect that this can happen to them. On the other hand, once retirees are on a fixed income, they are more likely to get this information and warnings about transfers of assets from elder-publications. Unless people are rich enough not to worry about this stuff or they can afford to get legal advice that might help them to plan a gifting strategy, making large gifts can be risky or nervewracking for retirees.</p>
I think you’re exactly right, and that the key for anybody who has substantial assets is to get good, professional advice, and then take the advice.</p>
<p>I have a really naive question about gifting. I know there is a certain amount (something like $13k?) you can give per year, say to an adult child or sibling.</p>
<p>But in actuality, how would anyone monitor this? For example, let’s say it’s 10 years from now and my niece is entering college and the bill is $50K per year, and I decide to help out. Is the college <em>really</em> checking that the check was drawn on a parent’s account versus an aunt’s account? Or do they just care that it clears? </p>
<p>Apropos of nothing, this also reminds me of a college friend who was from South Africa, and whose parents routinely wrote checks to the college for well over whatever tuition was - so she got the cash back which was a way for them to get cash into the US (this was the mid-80’s, so a very different political situation).</p>
Only the IRS cares about these gift limits, because you are supposed to pay gift tax if you exceed them. If you exceeded them and didn’t pay the tax, IRS might find out if they audited you.</p>
<p>^I thought it was the gift giver who has to report to IRS. I believe it is the gift giver who has to pay the tax if over the annual limit. Someone correct me if I am wrong.</p>
<p>born2dance94, here’s the problem some of us may have with this kind of thinking:</p>
<p>When a young person is learning to budget and live within their means, the knowledge that they can go to their parents “without hesitation” whenever “money is tight” can actually be a hindrance to their maturity, independence, and learning how to live within their means. Many of us learned how to manage money, how to budget, and how to figure out what our “wants” are vs. our “needs” because we went through periods of doing without, of scrimping and saving, and WAITING until money was no longer so tight in order to buy things like cars, houses, and even “just getting by.” “Just getting by” can mean a lot of different things to different people aside from just avoiding homelessness and starvation. One can usually scale back on things like the luxuriousness of one’s home, apartment, car, etc. in order to make it work without help. When you know in the back of your mind that Mom and Dad will always be willing to bail you out financially, it’s just human nature to let that assurance govern your actions. Only when you truly believe that you have only YOU to get you where you want to go do you dig deep within yourself to work harder, save more, and figure out just exactly what you really need and how to get that. “Necessity is the mother of invention” and all.</p>
<p>Of course there will be extenuating circumstances from time to time which can change this dynamic, and there are certainly people in the world who live off the largesse of their families and still go on to do great things, but they are the exception vs. the rule in my opinion. Finally, I would also say that when you have been through those hard times financially and eventually dig yourself out of them, that is a feeling of pride and accomplishment that no amount of Mom and Dad’s money can ever buy you.</p>
<p>The gift tax is the obligation of the giver, not the recipient. You can check the IRS website for details on how annual gifting works. A co-worker of mine is suing her mom’s estate since the mother had been sending “gifts” greatly in excess of the 13K limit to one set of grandchildren for many years. I guess the law of unintended consequences kicks in here- the mother (who I’m sure meant well) has now created a lot of conflict among the children and grandchildren over “who got more and how much more”, plus the IRS gets a “lookback” now that the estate is in probate.</p>
<p>Unless you are prepared to state with no hesitation that you have never made a mistake on your tax return, you probably don’t want to mess around with the gift tax/estate tax when you’re no longer around to deal with it. Seems like a nasty mess to bequeath to your kids.</p>
Pizzagirl:
The thing to do is to make the payment to the college directly in which case I believe it’s excluded from the gift tax since it’s for education - i.e. instead of writing your niece a check for $50K for use for college, send the $50K directly to the college for her tuition/qualified expenses. This way there’s no gift tax on it.</p>
<p>Yes, the obligation to pay the gift tax is on the giver, but there is no gift tax implication for amounts paid directly to the educational institution–which is why it’s such an excellent estate protection tool.</p>
<p>My point about the audit was that if you’ve been giving in excess of the gift limits but not paying the tax, the IRS may find that in an audit.</p>
<p>@Nrdsb4 I understand where it could lead to fiscal irresponsibility, but personally I’ve had the opposite experience. But I definitely see how the same situation could go the other way. Luckily, they’ve also taught me how to budget and save. That’s why they have enough money to say that they will always help me out. In fact, despite the fact that they could comfortably pay for everything I need, I still buy my own clothing and gadgets and my own food whenever I go out (apart from lunch money).</p>
<p>Hmm, well, you are only a senior in high school of course. You’ll see what I mean as you grow older. Not being curt but very sincere.</p>
<p>I asked my parents for money once-just once-in order to make it to pay day. They gave it to me, I paid it back, and I never asked again because it was a horrible feeling to have to do that. I personally would never want to receive my parents “help” for things like cars or houses as I view those things as purely my responsibility to take care of. It would be very demoralizing to ask for and accept assistance for those things. Obviously, not everyone feels this way.</p>
<p>"What are people’s feelings about grandparents helping with tuition? "
-when my grandkids approach college age in few years, I might volunteer helping or I might not. I would more compelled to help if I knew that they have tried very hard at HS to get top grades and have applied to UG’s known for their great Merit packages.</p>