What is the best way to give $50k-$100k to an adult child?

[Anonymous]

Anonymous wrote:I will be receiving an inheritance soon, and I would like to share some of it with my (adult) kids. I have 4 kids; currently ages 19, 21, 23, and 25.

This is the probably the only way I will be able to share a significant amount of money with them. We've paid for/are currently paying for their college (undergrad) in full, and our own retirement/end of life expenses are covered. But we do not have the financial ability to give them hundreds of thousands for the down payment on a house, or pay for major expenses for grandchildren, etc.

I would like to give each somewhere between $50-100k. What is the best way to do this?

What do you mean by that? I'd beef up your retirement than theirs. Running out of money and becoming a burden in old age is x100 times worse.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I will be receiving an inheritance soon, and I would like to share some of it with my (adult) kids. I have 4 kids; currently ages 19, 21, 23, and 25.

This is the probably the only way I will be able to share a significant amount of money with them. We've paid for/are currently paying for their college (undergrad) in full, and our own retirement/end of life expenses are covered. But we do not have the financial ability to give them hundreds of thousands for the down payment on a house, or pay for major expenses for grandchildren, etc.

I would like to give each somewhere between $50-100k. What is the best way to do this?

You're going to give 4 adult kids between $50k and $100k, and you think this means you *don't* have hte ability to give them down payment money or cover major expenses for their grandchildren?

DCUM is so bizarre - no matter how well a person is doing they always post with this hangdog, "I'm just one of the little poor guys, it's so sad how I have to live, all I've done is paid for four undergrad educations and completely funded my retirement, but I don't know what to do with the giant inheritance I'm about to get."

OP here
Did you miss that this is an inheritance?

I'm not claiming to be "poor"--but no, we do not have the type of income or assets to make a 100k gift out of our own money. Our HHI is $175k/year. The inheritance will be approx. $500k, so once I give the money to my kids, there will not be much left.

I might hold off unless you’re not or can’t planning to pay for weddings, etc. since this could go towards that.

[Anonymous]

OP here
I stated above " we do not have the type of income or assets to make a 100k gift out of our own money"

and you have to keep in mind that it would be X4.
If we give one kid $100k for a down payment on a house, we have to give it to each kid.
If we pay for one grandkid's college, we have to pay for ALL grandkids college. With $175k income, we are not in that position.
You really think that's unreasonable?

We are not WASPs. My parents (and my spouse's parents) did not do anything like this for us.
We paid for our own kids' expenses including college. We funded our own home purchases.
All four of my grandparents died within a few years of each other and my parents inherited a lot more money than I'm about to inherit.
All of my aunts and uncles did nice things for their adult children during that time; some took their adult kids (and ILs/grandchildren) on amazing luxury vacations. Some gave their kids large down payments for homes.
My parents did absolutely nothing for my siblings and I. My parents took multiple luxury vacations each year. Completely re-did their house. Bought two brand new luxury cars.

Fine, it's their money. But I want to be different for my own kids.

[Anonymous]

It's not enough money to be this concerned Op. One extra form included with your tax return. That's all. When you do your taxes. It's not enough money to matter, for tax purposes. It's not enough money to bother with a trust. Divide it equally.

[Anonymous]

Not enough to bother with this, "you and your spouse can each give $19k a year"

[Anonymous]

Don’t you have to pay inheritance tax?

[Anonymous]

I’d just keep it in an investment account for now and pull it out for weddings or a down payment when they’re ready. I would not be transferring it directly to them at their current ages.

[Anonymous]

Anonymous wrote:Don’t you have to pay inheritance tax?

OP here
I believe so. $500k (after all taxes, etc.) is the rough estimate one of my siblings gave. We will know more next week. My sibling is privy to more details of the estate than I am.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Don’t you have to pay inheritance tax?

OP here
I believe so. $500k (after all taxes, etc.) is the rough estimate one of my siblings gave. We will know more next week. My sibling is privy to more details of the estate than I am.

Of the jurisdictions in the region, only Maryland has an inheritance tax. And it only applies to "collateral heirs"

https://fredfranke.com/practice-areas/estate-trust-administration/maryland-estate-and-inheritance-taxes/

If just going to children, no tax is due.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would probably invest and give it to them later in life when it could serve a meaningful purpose, like buying a house, funding grandchildren, or funding the startup costs of a business. What are they going to do with $50-100k of cash in their early 20s anyway?

Get on the property ladder early?

I specifically noted a house purchase would be a good use of the money? If they want to buy a house in their early 20s sure. I don’t think most kids are thinking about buying a house in their early 20s though, so not a super likely situation

[Anonymous]

You should not give this money to your children now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Don’t you have to pay inheritance tax?

OP here
I believe so. $500k (after all taxes, etc.) is the rough estimate one of my siblings gave. We will know more next week. My sibling is privy to more details of the estate than I am.

No federal tax on 500k. You can do the gift limit from each spouse to each child. But they're pretty young to give that much money too. I would consider opening them all a retirement account. If they're all unmarried I might consider holding some amount back for each child's wedding.

[Anonymous]

Anonymous wrote:You should not give this money to your children now.

This. You still can plan to give it to them, but they are too young to have this kind of money.

[Anonymous]

Anonymous wrote:I will be receiving an inheritance soon, and I would like to share some of it with my (adult) kids. I have 4 kids; currently ages 19, 21, 23, and 25.

This is the probably the only way I will be able to share a significant amount of money with them. We've paid for/are currently paying for their college (undergrad) in full, and our own retirement/end of life expenses are covered. But we do not have the financial ability to give them hundreds of thousands for the down payment on a house, or pay for major expenses for grandchildren, etc.

I would like to give each somewhere between $50-100k. What is the best way to do this?

It's not a lot of money to worry about trusts.. Remember that the financial needs/maturity of each would be different. For example, the 19 yo may chose to splurge it on a fancy car and parties while a 25 yo may think about saving for the future (ofc your kids may be different).

I'd set up 4 separate investment accounts, one earmarked for each, but in your joint names (you and spouse). Any taxable event (e.g. dividends) will of course need to come out of your taxes. Sit with them and let them know about these accounts and allow them to witdraw from these accounts as needed. If 25 yo wants to withdraw the entire amount to buy a house, and you agree, by all means let him. If the 19 yo wants to withdraw $25K for a fancy trip to Europe, put your foot down and say nope but allow $5K, etc. If one of them doesn't touch the money for 20 years, so be it. They will have millions and will inherit it from you at a stepped up basis.

[Anonymous]

Anonymous wrote:I will be receiving an inheritance soon, and I would like to share some of it with my (adult) kids. I have 4 kids; currently ages 19, 21, 23, and 25.

This is the probably the only way I will be able to share a significant amount of money with them. We've paid for/are currently paying for their college (undergrad) in full, and our own retirement/end of life expenses are covered. But we do not have the financial ability to give them hundreds of thousands for the down payment on a house, or pay for major expenses for grandchildren, etc.

I would like to give each somewhere between $50-100k. What is the best way to do this?

Let your children find their own way lol. You paid for their college education already. They will be okay. Let them save for a down payment. Your children will be fine lol.