Anonymous
05/01/2024 14:56
Subject: Tax Advantaged things grandparents can do for grandchildren
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.
Anonymous
05/01/2024 14:05
Subject: Re:Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote:Anonymous wrote: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.
How does this 5 year gifting work? I’ve only been married for less than a year.
It's 5 years going forward. So if you give in 2024, you have met the limit and cannot gift again until 2029.
Anonymous
04/30/2024 22:21
Subject: Re:Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote: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
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.
Anonymous
04/30/2024 22:12
Subject: Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote:Anonymous wrote:I'm lucky in that my parents are well off. I'm not sure how much money they have but I know they have planned for paying the estate tax so it's above that amount. I just had a child, my parents' first and possibly only grandchild, and my father would like to discuss what he can do for his grandchild financially. I'm sure he already has a plan, but before we talk I'd like to have some idea of options. It's just hard for me to research right now because I'm very sleep deprived with a newborn! He gives my siblings and me the annual gift tax exclusion amount in a trust so I assume my child would get that as well. I also know grandparents can my for their grandchildren's school directly and not have to worry about estate tax. What about daycare? Anything else? I've also received quite a few checks from family for my child and I need to figure out what sort of account to set up for her to deposit them. Please help out a sleep deprived new mother! TIA.
start funding their ROTH ira early
A newborn does not have earned income
Anonymous
04/30/2024 20:51
Subject: Tax Advantaged things grandparents can do for grandchildren
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.
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.
Anonymous
04/30/2024 20:49
Subject: Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote: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.)
Anonymous
04/30/2024 20:40
Subject: Tax Advantaged things grandparents can do for grandchildren
Your kids are set for life with no tax planning at all. Unclench and try contributing to society.
Anonymous
04/30/2024 19:07
Subject: Re:Tax Advantaged things grandparents can do for grandchildren
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
Anonymous
04/30/2024 18:45
Subject: Re:Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote: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.
How does this 5 year gifting work? I’ve only been married for less than a year.
Anonymous
04/30/2024 18:43
Subject: Tax Advantaged things grandparents can do for grandchildren
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.
Anonymous
04/30/2024 18:42
Subject: Tax Advantaged things grandparents can do for grandchildren
Don’t forget healthcare expenses. As long as they pay the healthcare bill directly this does not count towards gift tax either.
Anonymous
04/30/2024 18:35
Subject: Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote: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...
Anonymous
04/30/2024 18:33
Subject: Tax Advantaged things grandparents can do for grandchildren
They can also open their own 529 in your child's name if they don't want to gift to your husband...
Anonymous
04/30/2024 18:31
Subject: Re:Tax Advantaged things grandparents can do for grandchildren
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.
Anonymous
04/30/2024 14:42
Subject: Tax Advantaged things grandparents can do for grandchildren
Anonymous wrote:OP here. My understanding is that grandparents paying for daycare is not tax advantaged in the same way that paying directly for pre K and up is unless it’s part of the $32,000 they can gift her generally. Am I wrong on that? She’d be starting at 1 year old due to maternity and paternity leave. Thanks for the great ideas, I didn’t even think of summer camp!
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