Reply to Way to set up new account to max out annual gifts

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Thanks, all. This is OP. This was very useful. We will set it up in kid’s name only and tell of its existence but talk about benefits of not touching it and letting it grow until it’s needed for something bigger. That was useful information about how a joint account could run into tax issues so we won’t do it that way. [/quote]

OP, what’s the size of your estate? There’s a lot of confusion out there about the annual gift tax exemption. Going over it doesn’t mean you owe any taxes. It just means you fill out one form and the overage counts towards your lifetime exemption of $15m for each spouse.

So if your joint assets are likely to stay under $30m, don’t sweat it, you can just give them the whole down payment when the time comes and fill out the one form and not owe any taxes ever anyway. They don’t pay taxes on it no matter the amount.

I have a personal philosophy having watched this play out across my extended family that you should not give gifts to adult children with strings. Because it won’t work anyway and it will damage your relationship and cause problems in their marriage too. Either don’t give them anything, which is valid, or give them gifts without strings and let them f$& up if they’re going to.

The middle ground would be a trust with a generous HEMS clause, but frankly I think you shouldn’t do that unless you need it for taxes.

If your child is so nonfunctional that you need to buy them a house without giving them a gift and letting them decide that’s what they should do (even if you say that’s your suggestion), buy the house and let them stay there as a tenant. 
[/quote]

I think there are strings and there are strings— there is a middle ground between saying nothing and having l a trust.

My parents gave me money and suggested I save for a big expense like a downpayment and I did and it worked out great. I’ll probably do the same for my kid. If they want to spend it starting a business that would also be fine. If they want to spend it traveling around the world that’s their choice. [/quote]

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