The $34k (per couple to a single person) gift "limit" is just the maximum amount you can give without reporting it. You can give someone over that amount in a year, you just have to report it and start tracking to ensure it doesn't go above the total lifetime exclusion ($13 million right now). So even if a certain payment/tuition counts as a gift, they can give large amounts and not be taxed. They just have to start reporting it. https://www.nerdwallet.com/article/taxes/gift-tax-rate |
The limit for exempted gifts is $36k this year (from both grandparents to grandchild). You also didn't mention if your parents gift to your spouse as well as you (you just mentioned your trust). Assuming they don't already gift to your husband, they could do 5 years' worth of gifting to your spouse, $160k, and that money could go into the 529 on day 1. Then, they can still gift $36k per year for daycare until the child goes to PreK, and then beyond that keep gifting the child the max for a brokerage or savings account or to cover expenses, etc. Then they could just keep doing this in addition to paying for school once PreK starts. In 5 years, they can superfund the 529 w/ a second gift to your husband too. |
They can also open their own 529 in your child's name if they don't want to gift to your husband... |
Sorry didn't finish the thought. But that would count as the gift to your child which would cut into the additional you could use for daycare, etc. Versus the gift to your spouse (to go into 529) would be an additional $160k... |
Don’t forget healthcare expenses. As long as they pay the healthcare bill directly this does not count towards gift tax either. |
OP I wouldn’t worry too much about the finances and tax aspects, I assume your parents have people who can figure all of that out. I would have a conversation with your husband about whether there’s any guardrails you want put in place- like acccessing the trust at 30 or 40 vs 18, successor trustees, etc. Or you can see what your dad is thinking and then discuss options with your husband. |
How does this 5 year gifting work? I’ve only been married for less than a year. |
If my parents had this kind of money I would not have my child in daycare. I’m surprised they haven’t asked about that—all the wealthy in-laws I know are opinionated about this stuff, and about private school v public, etc |
Your kids are set for life with no tax planning at all. Unclench and try contributing to society. |
Envy is unbecoming. If you can’t contribute, you can keep scrolling. (Not OP.) |
Seems like they have quite a lot of money. There is no reason to complicate you all's life opening new accounts. If any, learn how they got it and simply continue to invest/preserve the money.
They can continue to give money away to you and siblings and you all will do great. Zero reason for 529. It's for the company holding it to make money. |
A newborn does not have earned income |
It's not my money. It's all in a trust. I don't live in a huge house and my husband and I work from home a lot so we would feel awkward having a nanny in the house all the time. The daycare is just down the block and she won't be going until she's a year old. We can stagger our schedules so one of us can drop her off later in the morning and one of us can pick her up early. The daycare is very nice and I kind of like the idea of having some separation from my child during the day to get work done and having her in a structured environment. I'll see how it goes, if we hate it we can revisit the nanny discussion. |
It's 5 years going forward. So if you give in 2024, you have met the limit and cannot gift again until 2029. |
Love how OP is sleep deprived with a newbor …but I guess awake enough to ask how much money they can bleed from their parents. |