How to equalize financial gifts to adult children

[Anonymous]

I am looking for ideas about how to fairly pass funds to my two children. We are in our 60s now and expect that our estate will be subject to federal and state estate taxes when we die. We have two adult children, one of whom just married. Our other child is single. My spouse and I would like to each gift the maximum amount ($19,000) this year to both children and to our child's spouse. This would result in our single child receiving less. I know that we need to consult an attorney, but I am wondering if people have suggestions for how they have handled this to make sure things are equal. I am thinking that the best option would be to put an equal amount in a trust each year for our single child.

[Anonymous]

Fwiw I am an adult child and I absolutely don’t care about this kind of thing being equal.

But, we all have enough money and no hardships that would preclude us from supporting ourselves anyway.

The major trust in our family splits per stirpes, so I actually encourage my parents to do unequal distributions when they are alive because some branches have more grandchildren and that just makes sense to me. We definitely get unequal on tuition and housing and no one is upset about that.

You probably should have a conversation about it as a family.

[Anonymous]

Anonymous wrote:Fwiw I am an adult child and I absolutely don’t care about this kind of thing being equal.

But, we all have enough money and no hardships that would preclude us from supporting ourselves anyway.

The major trust in our family splits per stirpes, so I actually encourage my parents to do unequal distributions when they are alive because some branches have more grandchildren and that just makes sense to me. We definitely get unequal on tuition and housing and no one is upset about that.

You probably should have a conversation about it as a family.

Thanks for this thoughtful response. We have discussed with the married child (who will probably be much better off than the unmarried child) and they don't care about equality but their spouse is reluctant to accept a gift without it being equal. We would also prefer it to be equal.

[Anonymous]

Don’t forget, you can each give $19,000 to each individual. So the max is 38,000 to each individual. You could do 38k to the couple and 38k to the individual. It’s not like you’re required to max out the exemption. But yes, this should all be part of an overall plan anyway.

If you run up on the end of the year, do even gifts and make a point to figure it out for next year. It’s not so terrible not to max it out this year.

[Anonymous]

NP, what is the tax treatment of noncash gifts? Could you buy the unmarried child a car or real estate?

I think it's helpful to be equal, even if everybody wants to be ok with unequal gifts. People hit different stages of life (unemployment, new baby, unexpected house repair) where suddenly they may regret greenlighting the gift to someone else.

[Anonymous]

I do not think it is right to give the married child 2x the unmarried child. Each of you give the unmarried child 19k and do the same for the married child. Easy and equal. If either has kids at some point. I think it would be fine to contribute to college as a separate issue..

[Anonymous]

Anonymous wrote:Don’t forget, you can each give $19,000 to each individual. So the max is 38,000 to each individual. You could do 38k to the couple and 38k to the individual. It’s not like you’re required to max out the exemption. But yes, this should all be part of an overall plan anyway.

If you run up on the end of the year, do even gifts and make a point to figure it out for next year. It’s not so terrible not to max it out this year.

That’s my vote - 38k to each.

[Anonymous]

I would give $38k to the couple: $19k from each you and spouse, and the same to the single child.

[Anonymous]

If only give to your children and grandchildren (not step). Not spouse. This makes it fair. Do the max gift amount every year, straight into a 529 for grands.

[Anonymous]

Anonymous wrote:Fwiw I am an adult child and I absolutely don’t care about this kind of thing being equal.

But, we all have enough money and no hardships that would preclude us from supporting ourselves anyway.

The major trust in our family splits per stirpes, so I actually encourage my parents to do unequal distributions when they are alive because some branches have more grandchildren and that just makes sense to me. We definitely get unequal on tuition and housing and no one is upset about that.

You probably should have a conversation about it as a family.

More power to this person who wouldn't care... but my siblings and I are pretty well off AND $20,000 per year would make a material difference in our lives. In many cases, married people have lower "per capita" expenses than single people because they are splitting rent and utility costs.

Give each kid $38k per year to help manage your estate. And talk to a lawyer/estate planner to help explore other options if minimizing taxes is a big concern for you.

[Anonymous]

I'm not a tax lawyer, but I think the only downside if gifting your single kid more than $19k each year is that each dollar above that reduces the lifetime estimate tax exemption you have to work with. That's currently like $14 million.

[Anonymous]

Anonymous wrote:I'm not a tax lawyer, but I think the only downside if gifting your single kid more than $19k each year is that each dollar above that reduces the lifetime estimate tax exemption you have to work with. That's currently like $14 million.

19k from each parent to single child wouldn’t go over that.