How to make this fair: gifting to kids with different means

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
johnubc
Posts: 870
Joined: Wed Jan 06, 2010 5:54 am

Re: How to make this fair: gifting to kids with different me

Post by johnubc »

Equal amounts to all.

Life changes in an instant - Kid A could end up needing more funds due to any unforeseen incidents.
Disparity will likely lead to resentment - sometime unintentionally.
Kid A should not be penalized because Kid B has chosen a different path - unless there are documented reasons why Kid B has a different path.
Kid B could need funds in the future and will try and tap Kid A for them - at least if Kid A had received some inheritance funds, he could use them.

I am Kid A. I drive a 12 year old car and save money, do not eat out much. My brother does a 2 year lease, goes on nice yearly vacations and eats out often. He does not save as much as I. He will also have a pension at retirement (which is why he does not save as much) and often complains about his 'low' salary and how he lives paycheck to paycheck.
scouter
Posts: 659
Joined: Fri May 28, 2010 11:24 pm

Re: How to make this fair: gifting to kids with different me

Post by scouter »

Another vote for keeping it as equal and fair as possible. My parents were very careful to do that with us while my wife's parents constantly bailed out their "squeaky wheel" children and didn't offer equal gifts to the responsible ones. As you might guess, my brothers and I get along quite well while my wife and her siblings harbor a lot of of resentment and stress.
Grt2bOutdoors
Posts: 25617
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How to make this fair: gifting to kids with different me

Post by Grt2bOutdoors »

BigJohn wrote:
Toons wrote:Speaking for myself I would give them equal amounts,regardless,a gift means just that.It is their money to do as they please.
+1
+1 Otherwise, Child A will come to resent Child B, maybe not now, but after you've moved on. Read Beyond The Grave for a primer of what not to do.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
GoldenFinch
Posts: 2728
Joined: Mon Nov 10, 2014 10:34 pm

Re: How to make this fair: gifting to kids with different me

Post by GoldenFinch »

Grt2bOutdoors wrote:
BigJohn wrote:
Toons wrote:Speaking for myself I would give them equal amounts,regardless,a gift means just that.It is their money to do as they please.
+1
+1 Otherwise, Child A will come to resent Child B, maybe not now, but after you've moved on. Read Beyond The Grave for a primer of what not to do.

I think this advice is wise. Even though I am sure there are cases where everyone is happy with out-in-the-open unequal treatment in situations like the OP describes, sibling relationships have an emotional component/undercurrent and memories are long. I think if one has the means to treat adult children equally, it is probably a good idea to do so if you don't want to risk future bad feelings.
jstrazzere
Posts: 260
Joined: Tue Feb 18, 2014 3:19 pm

Re: How to make this fair: gifting to kids with different me

Post by jstrazzere »

scouter wrote:Another vote for keeping it as equal and fair as possible. My parents were very careful to do that with us while my wife's parents constantly bailed out their "squeaky wheel" children and didn't offer equal gifts to the responsible ones. As you might guess, my brothers and I get along quite well while my wife and her siblings harbor a lot of of resentment and stress.
Are you saying that you wouldn't get along with your brothers, if some got more from your parents?
And are you saying that your wife and siblings would have gotten along quite well, if not for the unequal bailouts?

My sense in my family, and that of others I know personally, is exactly the converse.
Siblings that get along well don't need "equal".
Siblings that don't get along well aren't healed by "equal".

"Fair" is always in the eye of the beholder.
HIinvestor
Posts: 1877
Joined: Tue Apr 08, 2014 3:23 am

Re: How to make this fair: gifting to kids with different me

Post by HIinvestor »

We are helping each kid in different ways. S is definitely kid A with excellent full-time job, significant earnings, savings & retirement accounts. We loaned him money at the lowest interest rate that IRS would allow (40 basis points) and also loaned him money for his solo 401K. He also travels as much as he wants--for work and leisure and generally has a nice life.

D is kid B, as she has some chronic health issues that she and we continue to struggle with. These health issues have plagued her and made her take 6 years to get her bachelor's degree and made it tough to the the stamina to hold a job so far. We have been paying all her expenses and are likely to continue to do so until her docs are able to get her health to be consistently robust enough to hold a job.

We have a hard time coming up with gifts for S because if he wants or needs anything, he evaluates what's out there and buys it for himself. When we visit together, he and we like that we dine at nice places and we pick up the tab (which we can well afford). We did give him some cash for Christmas but he gave it all to D and said it was his contribution to their joint gift to us of a "Smart TV." D laughed that it was 90% of the cost of the TV.

We will be talking with our CPA about how best to gift each kid, as we will likely have significantly more than we need. S is in the same 25-28% tax bracket we are in, while D is in the 0% bracket, so we may gift her with stock with LTCG and gift S either tax-free bonds or cash. If they continue to be in different income brackets, we may gift D the tIRAs and S the Roth IRAs, but we haven't thought that far ahead yet.

We are hoping that D will get healthier in the near future--she is being treated by one of the top docs in the US for her condition, so we are hopeful.
Johno
Posts: 1883
Joined: Sat May 24, 2014 4:14 pm

Re: How to make this fair: gifting to kids with different me

Post by Johno »

jstrazzere wrote:
scouter wrote:Another vote for keeping it as equal and fair as possible. My parents were very careful to do that with us while my wife's parents constantly bailed out their "squeaky wheel" children and didn't offer equal gifts to the responsible ones. As you might guess, my brothers and I get along quite well while my wife and her siblings harbor a lot of of resentment and stress.
Are you saying that you wouldn't get along with your brothers, if some got more from your parents?
And are you saying that your wife and siblings would have gotten along quite well, if not for the unequal bailouts?

My sense in my family, and that of others I know personally, is exactly the converse.
Siblings that get along well don't need "equal".
Siblings that don't get along well aren't healed by "equal".

"Fair" is always in the eye of the beholder.
Equal treatment by parents in money to kids, insofar as one can determine it, is the only way to go. I don't agree 'siblings with good relations don't need equal'. Parents with kids who have good relations with one another can make them less good by treating them unequally in money, I'm convinced. Whereas, nobody said grown siblings with bad relations could have it fixed by equal treatment from their parents, so that's really irrelevant.

My sons in particular got along as kids better than I ever did with my close in age sibling (virtually never quarreled, we constantly did) and also with their somewhat younger sibling (though that's easier in general I think), and they all get along as young adults; but I'm quite convinced from every subtle signal I get that we'd be straining that good relationship to treat the so far more successful one differently wrt money than the others, and we don't. A difference in the will is out of the question IMO, that's really a slap in somebody's face, though maybe a saintly enough person can absorb it with equanimity and not take it out in bitterness toward siblings. That's just a stupid or mean thing to do I have say bluntly, except in exceptional circumstances (of medical including mental/substance issues). But even for ongoing gifts and more fuzzy stuff (how much discount did we give in selling one of them our car? etc) I think their confidence that dad is a stickler for calculating complete equality as much as possible simply removes a potential complication from their relationship. It simplifies things, with no compelling argument in the other direction.

The more legitimate complication I can see is when the question is about gifts to grand children, ie whether those count strictly as gifts to the parent of the particular grand child, or whether everyone can reach agreement that the grand children are then equal, regardless of who their parents are.
User avatar
HomerJ
Posts: 21246
Joined: Fri Jun 06, 2008 12:50 pm

Re: How to make this fair: gifting to kids with different me

Post by HomerJ »

lthenderson wrote:I'm kid A and my brother is kid B. My parents wanted to help my brother out with a significant gift once but they sat down with me to explain their reasoning first and making sure I was okay with it. I think I was in my 20's at the time. I was happy to agree with them because I didn't need the money and I knew it would perhaps make his life easier. They gave him the gift and I got their gratitude.

Now twenty years later, my brother is also a kid A having learned the value of what some money stashed away for 20 years can do. It reaffirms that it was the right decision.

If I'm in that situation, I would consider unequal gifts but I would set down with kid A first to make sure there wouldn't be any hard feelings. Hopefully both of my kids will end up as A kids and I won't have to worry about it.
I'm kid A, and my sister is kid B... Unfortunately, she has remained kid B for 20 years, and is still dependent on help from my parents every year.

But it doesn't bother me at all that they help her out... I don't need the money...

I did have a conversation with my dad and mom about their land and their house.... I'd be okay if they gave the whole thing to her, so she'd have a place to retire someday... But I wouldn't want her to sell the land, and just use the money for whatever... If she did that, I'd want my half.... or I'd like to buy her half from her. Not sure how we can arrange this without some weird kind of trust... I may just have to accept that she can do whatever she wants with it.
MathWizard
Posts: 6542
Joined: Tue Jul 26, 2011 1:35 pm

Re: How to make this fair: gifting to kids with different me

Post by MathWizard »

HIinvestor wrote:We are helping each kid in different ways. S is definitely kid A with excellent full-time job, significant earnings, savings & retirement accounts. We loaned him money at the lowest interest rate that IRS would allow (40 basis points) and also loaned him money for his solo 401K. He also travels as much as he wants--for work and leisure and generally has a nice life.

D is kid B, as she has some chronic health issues that she and we continue to struggle with. These health issues have plagued her and made her take 6 years to get her bachelor's degree and made it tough to the the stamina to hold a job so far. We have been paying all her expenses and are likely to continue to do so until her docs are able to get her health to be consistently robust enough to hold a job.

We have a hard time coming up with gifts for S because if he wants or needs anything, he evaluates what's out there and buys it for himself. When we visit together, he and we like that we dine at nice places and we pick up the tab (which we can well afford). We did give him some cash for Christmas but he gave it all to D and said it was his contribution to their joint gift to us of a "Smart TV." D laughed that it was 90% of the cost of the TV.

We will be talking with our CPA about how best to gift each kid, as we will likely have significantly more than we need. S is in the same 25-28% tax bracket we are in, while D is in the 0% bracket, so we may gift her with stock with LTCG and gift S either tax-free bonds or cash. If they continue to be in different income brackets, we may gift D the tIRAs and S the Roth IRAs, but we haven't thought that far ahead yet.

We are hoping that D will get healthier in the near future--she is being treated by one of the top docs in the US for her condition, so we are hopeful.
I think this situation is different than that of the original post. In your case, you have a D with a debilitating illness.
It sounds like your S has the right kind of values (probably got them from you.), and recognizes that health is much
more important than wealth.

In your situation, giving more to D than to S is reasonable based on need, though I would likely talk to him to let him
know why you are taking such action, and that you would do the same were the roles reversed. Hopefully this would
take some of the emotions out of the equation.
User avatar
ray.james
Posts: 1902
Joined: Tue Jul 19, 2011 4:08 am

Re: How to make this fair: gifting to kids with different me

Post by ray.james »

I think it comes down to How much inheritance/ help and for what needs of the kids.

Like someone posted in the thread it matters if it is 100K or 2 million dollars getting split. It also matters whether the help is going for a grand kid education, a house payment or mismanaged expenses for them while keeping up with Jones.

Sometimes career choices can take people to unpredictable places. I appreciate parents who discuss it with kid A and help out kid B. Both should not feel bad that the help is unequal. After all, I grew up loving, kicking and experiencing same life with my sibling for most of the formative years.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
HIinvestor
Posts: 1877
Joined: Tue Apr 08, 2014 3:23 am

Re: How to make this fair: gifting to kids with different me

Post by HIinvestor »

Yes, we are glad that our kids are done with college and have no debt or loans. S had a lot of the same health issues that D still has, so he has considerable sympathy for her. The two of them are very close and he's grateful for the below market interest loan we have given him and that we are able to help D.

We haven't really given either of them money to "play" with so much, though the both are grateful they gradauted without debt and that when we are together, we pick up all meals and expenses. ;) S was able to use the money we loaned to expand his inventory and create greater profits for his business, so we're happy we were able to help with that.
angelescrest
Posts: 1728
Joined: Tue May 27, 2008 10:48 am
Location: West Coast

Re: How to make this fair: gifting to kids with different me

Post by angelescrest »

I didn't grow up in a home where it was all about everybody getting the same treatment or reward as the other. My sibling and i were often treated differently and sometimes one got more than the other, or something entirely different. Even as adults my sibling gets more help and frankly needs it more than I do. We all have a good relationship and that's what matters. I think part of the issue is that when kids are raised to expect that they will always get an equal share, then when they don't, resentment festers and relationships sour. In my case, I was taught that things aren't always equal or fair, and I can handle it when it's not. Not a big deal.
scouter
Posts: 659
Joined: Fri May 28, 2010 11:24 pm

Re: How to make this fair: gifting to kids with different me

Post by scouter »

jstrazzere wrote:
scouter wrote:Another vote for keeping it as equal and fair as possible. My parents were very careful to do that with us while my wife's parents constantly bailed out their "squeaky wheel" children and didn't offer equal gifts to the responsible ones. As you might guess, my brothers and I get along quite well while my wife and her siblings harbor a lot of of resentment and stress.
Are you saying that you wouldn't get along with your brothers, if some got more from your parents?
And are you saying that your wife and siblings would have gotten along quite well, if not for the unequal bailouts?
Yes, I'm saying exactly that. My wife and her siblings can barely talk to each other because of the resentment of their parents having treated them unequally as far as money was concerned. Before the unequal treatment they were very close. Her parents have been gone now for many years and the resentment remains.

On the other hand, my brothers and I admired our parents for going out of their way to treat us as equally as possible, because we knew that there was nothing more important to them than knowing that we would stay close. Maybe we would have maintained good relationships regardless, but we'll never know. I do know that resentment over unequal treatment was what tore my wife's family apart.

In raising our own kids, (25 & 23) we've followed my parents' example. So far, so good.
HIinvestor
Posts: 1877
Joined: Tue Apr 08, 2014 3:23 am

Re: How to make this fair: gifting to kids with different me

Post by HIinvestor »

To be honest, my BIL may have had more need for money than H because H has a pension with COLA while BIL doesn't. It was nice of SIL to give everything to the brothers equally and they made sure that both were happy with the distribution. It was a significant windfall and helpful to everyone.

My parents have always done their best to be fair and as equal as possible to all of us. We are all close. I'm not sure what would have happened if there were blatant favortism of one of us over the others, but they gave to all of us according to our needs and their ability at the time. We also give to them as we are able, according to our abiities and interests over time.

Fairness is a lot in the eye of the beholder. For some people, they always will feel they got the short end and that they are treated unfairly. It's unfortunate but have no idea how that can be cured. I think mathimatical equality can be unfair, depending on circumstances, especially where there are medical issues and yes, even differences in talent and earning power. Life and time are unpredictable, so it's tough to know how things will work out.

I know several families who gave the gift of experience and that seemed to have been well-received by all and created happy memories. It's early now to decide precisely what we will eventually do, but I think the gift of experiences (extended family vacations that we fund) and maybe funds toward any grandkids' educations will be part of our legacy.
island
Posts: 1971
Joined: Tue Jul 23, 2013 1:45 pm

Re: How to make this fair: gifting to kids with different me

Post by island »

Keep it equal. They're your children. Base your decision on that alone.
Forget about their spending habits, education, career choice, marital status, etc. Fortunes and circumstances can change. Don't politicize it or make it a business transaction.
Elena78
Posts: 90
Joined: Thu Jul 19, 2012 3:58 pm

Re: How to make this fair: gifting to kids with different me

Post by Elena78 »

I am going to give a "kid" perspective on this. My parents both have pensions that they save way more than half of each year as well as lots of savings, I don't know the total amount. My brother and his family are doing okay but struggle a bit financially and have little saved (but will have a pension). My parents have made everything equal in their will but when the times comes, I would probably give him my half of their house in case they wanted a mortgage free, well kept house and the would be happy with the cash split in the middle. I would also be fine with him taking their vehicles, furniture, etc. if he wanted. So, as the sibling doing a little better, I don't mind my brother getting a little more, especially when it comes to the material goods (which will make things easier) although there will be a few meaningful keepsakes I might want and he wouldn't argue about.

On my husband's side, my in laws are very focused on everything being 100% equal. They put $3000 toward our wedding (total cost $9000) and then when his sister got married (and sister and husband's combined income is about $350,000 which is significantly more than ours), they gave her $4500 and then gave us an additional $1500 to compensate. We didn't feel it necessary but also found it strange that his sister accepted that money from his parents who are not nearly as well off as her.

Then, his brother got married. His brother and now wife make quite a bit less than we do but ended up having an extravagant wedding. Her parents put in $25,000 and my in laws put in $15,000. They then tried to come back and give both his sister and us enough money to equal it out. We refused and so did she. We would rather them save that money for what will hopefully be a very long retirement (they are currently retired). We didn't mind them giving the brother who makes less more help, we did mind that the brother chose to spend so much given their current financial circumstances. That money would have been much better used to pay down student loan debt that the parents are co-signers on for him. So, again from the kid's perspective, we don't mind giving different amounts as long as the recipients don't seem selfish in the process, if that makes sense.

It is my understanding that my in laws have also taken into account the amount that they spent on each child's education or helping out each child post education in other ways and have unevenly split their will to try to make it all even in the end. I am afraid this will cause more stress when the time comes because there could be some hurt feelings about when they last updated it, whether their records are correct, and if money has been given since the last will update. In other words, their focus on trying to calculate out what will be equal will make it feel less fair when that very sad and already stressful and emotional time comes.

My vote is to talk to kid A about it and plan to give pretty equally but not to over think it.
Crow Hunter
Posts: 1054
Joined: Wed Jun 27, 2012 12:05 pm

Re: How to make this fair: gifting to kids with different me

Post by Crow Hunter »

I think it depends. :D

In my own situation, I am kid A and my brother is B.

My brother is "B" because of consistently poor decisions and choices contrary to all advice from myself and my parents. My Father used to say that "money burns holes in his pockets".

My parents always split things as equally as possible. Even when we were little we knew that the person with the more expensive Christmas gifts would get fewer than the one with the less expensive gifts because we each got the same "allotment" of gifts. Later, when they would help my brother, they would give money to me. Where my brother would blow it, I invested/saved it.

If my parents had chosen to favor my brother over me, it would have caused resentment on my part, because my brother's circumstances are related to his own poor choices.

If, on the other hand, he had circumstances beyond his control (health, job loss, etc), it would not bother me that he would get more. They often helped him in non-financial ways much more than they helped me and I don't feel resentment for that.

ETA: My resentment would not be about the money itself. It would be because I would feel that "doing the right thing" and following my parents advice was being ignored while "doing the wrong thing" and blowing money was being rewarded.
User avatar
HomerJ
Posts: 21246
Joined: Fri Jun 06, 2008 12:50 pm

Re: How to make this fair: gifting to kids with different me

Post by HomerJ »

boroc7 wrote:I didn't grow up in a home where it was all about everybody getting the same treatment or reward as the other. My sibling and i were often treated differently and sometimes one got more than the other, or something entirely different. Even as adults my sibling gets more help and frankly needs it more than I do. We all have a good relationship and that's what matters. I think part of the issue is that when kids are raised to expect that they will always get an equal share, then when they don't, resentment festers and relationships sour. In my case, I was taught that things aren't always equal or fair, and I can handle it when it's not. Not a big deal.
So, let's say your parents die, and then leave everything to your sibling and nothing to you... You wouldn't feel even a little bit of resentment?
FireProof
Posts: 960
Joined: Thu May 05, 2011 12:15 pm

Re: How to make this fair: gifting to kids with different me

Post by FireProof »

I, on the other hand, am definitely Kid B. I would certainly not expect my parents to give me more money, nor would I expect it sooner (in fact, I don't expect a cent until both my parents are dead, which will, hopefully be at least 30 years from now). I made my choices, and don't count on being subsidized in my more relaxed lifestyle. My sister and I are very close, and she wouldn't mind at all, but equality is just normal in a family.
HIinvestor
Posts: 1877
Joined: Tue Apr 08, 2014 3:23 am

Re: How to make this fair: gifting to kids with different me

Post by HIinvestor »

Obviously, this is a touchy subject and has to be handled carefully to minimize hurt feelings. As was pointed out, Child A can always turnndown gifts or re gift them to a Child B, so this doesn't really have to be complicated.
Johno
Posts: 1883
Joined: Sat May 24, 2014 4:14 pm

Re: How to make this fair: gifting to kids with different me

Post by Johno »

I think everyone has a certain tendency to want to see themselves as moral and equanimous, not necessarily bad if it's part of a goal of actually living that way. Who is going to post and say they did or would act petty in face of unequal treatment from their parents? So IMHO a certain discount factor has to be introduced in general for expressions like 'wouldn't bother me', especially the ones which explain that it's not or wouldn't be the money but something else that bothered them (that the other person spent so much despite their circumstances, etc). I think in fact sibling rivalry is a natural human tendency and somewhere not that far below the surface even in harmonious families. Again, I didn't get along with my sibling as a kid, cats and dogs. And I was somewhat resentful of the pressure I perceived to attend a university not my first choice because I got a scholarship there while my parents paid in full for sibling's med school. My family had other problems (revolving around substance issue w/ one of my parents) so it was just one in a stew of things, but I doubt I'm *so* much more selfish and petty than the average person to have disliked the unequal treatment in education spending.

My grown kids always have and still do get along great by comparison, though I don't take any direct credit, I really don't know why that is. But I don't think it would be that hard to introduce tension with unequal treatment, so will stick to the strictly equal path. I do realize it's somewhat situation dependent, as I said before if one kid is say disabled or has even serious curable medical problems of course no healthy and reasonable sibling would demand dollars and cents equality for something like that. Likewise even if it's just a matter of helping a kid who is in financial trouble, some people can just manage that, not manage to also 'compensate' kids who are doing better: so 'equal' would mean not fully helping the struggling kid. Although, it might be damned if do or don't in that case: 'fairness is in the eye of the beholder' but you can bet the 'beholder' who is responsible is going to tend to resent help to people who aren't responsible, family scale or societal scale.

We can afford to give our more successful (so far, who knows the future) kid money they don't need to match help to a less successful one and another still in school, so we do. If somebody says no thanks and gives it back, their choice, fine too. And an unequal will is categorically out of the question in our view.
ne2ca28
Posts: 90
Joined: Sat Nov 08, 2014 5:19 pm

Re: How to make this fair: gifting to kids with different me

Post by ne2ca28 »

This is an interesting topic and I'd still consider myself the kid, even though I am a grown man.

It is tricky because there are so many variables, but I say for planned gift giving, focus on being equal, consider the feelings of others, and don't think about it too much. There are so many factors - jobs, children, education, type of kid (athlete vs average vs booksmart vs needs a swift kick in the butt). I would definitely talk to Kid A and you never know, maybe Kid A will gift some to Kid B. For general week to week, month to month stuff, I'm not sure if it needs to be equal. Everybody is different and hopefully everyone is understanding.

I am one of 7 (difference from youngest to oldest is 18 years), so this may not apply to me much, but I can just elaborate on how random it all is and how timing is everything. I was the second youngest, so by the time I was 16, it was pretty much just me and my younger brother in the house. In hindsight, you could say that the youngest two had (slightly) nicer cars to drive, more room in the house, went to better college, etc, just because the older ones were off on their own and earning their own dime and my dad happened to have better luck with his job. We also had to deal with divorce and both parents passing before we were 30. It would be crazy to try to tie an amount to cars, schools, general gift giving/help and life events. With respect to Christmas and cash gifts, my dad was pretty equal and also gave equal amounts to the grandkids. Those who didn't have kids, didn't get a gift for them. We would never feel that our gift was lower because grandkids were included in the calculation or something like that, but if I got $1000 and sister got $750, there would be some chatter.

If it was a planned gift (not counting grandchildren), we would all assume it would be equal. That is how my dad's trust was distributed, everything was divided by 7 and no one batted an eye. One family could've been pulling in $1M and another $50k and it still would have been equal. We worked to get one brother a cash advance on his portion of the distribution because he needed it, and that was it. Separately, of course, we would all help a sibling in need. If it was a parent generally helping here and there, get your act together, spend some time together stuff, no one really batted an eye if one sibling was getting more attention because that's just how it was.

I have seen it go bad, where siblings did not think it was fair. It was between my dad's siblings and his parent's estate. There was some heated controversy with his parent's estate and splitting it between the siblings. They didn't talk to each other very much at all afterwards. I don't know what exactly happened, and I don't really care, but I do know that if it doesn't turn out right, it could definitely hurt relationships, even tear them up to shreds.
Alan S.
Posts: 12629
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: How to make this fair: gifting to kids with different me

Post by Alan S. »

Fact remains, if you do what you think is fair, many beneficiaries will not think likewise. Therefore, as a parent you are always working with a trade off between what you feel is fair vs what damage that will cause between the beneficiaries for life.

Even if you leave equal shares, prior lifetime gifts of substance can create the feeling that one beneficiary has already received inheritance in advance and therefore equal inheritance means unequal treatment when large lifetime gifts are factored in.

If siblings tend not to see eye to eye to begin with, the final parental death will almost always be the straw the breaks the relationship for good.
Katie
Posts: 90
Joined: Fri Aug 15, 2014 1:09 pm

Re: How to make this fair: gifting to kids with different me

Post by Katie »

First off, I understand that nobody has any "right" to an inheritance or gift. Whatever the person wants to do with their money is their right. However, if kids see their parents decisions as "unfair" it can have implications in many ways.

My parents have always made gifts (and provisions in their will) equal among their kids. Their parents often played "favorites" and they were determined to make sure they didn't do this. The one exception is helping with education expenses for their grandkids.. Only one sibling has children, so only one sibling got the benefit of assistance with education. But we always understood education was the most important thing to my parents. They helped each of us siblings with our expenses, and we all understand and appreciate that this is a gift they want to give to their grandkids (and that if all the siblings had kids, all the grandkids would be treated equally in this regard).

Luckily, my siblings and I get along well and if any one of us had unexpected financial drain or medical costs, the others would help out in any way they could.
noco-hawkeye
Posts: 465
Joined: Sat Aug 16, 2014 8:20 am

Re: How to make this fair: gifting to kids with different me

Post by noco-hawkeye »

I am one sibling out of 4, in varying stages of the A to B spectrum. I am perhaps the most A like, in not really needing it and doing fine on my own.

Here is another point of view - let's say kid A and B have kids of their own. And the signs are that A types tend to have A kids, and B types tend to have more B kids. If you help out the A kids, they might grow the resources by quite a bit. The B kids burn through the money with little to show and are back in trouble in a few years.

What is the better way to use the money in this type of situation? I'm not sure there is one correct answer. My parents kept everything equal, and I am very glad they did. I sometimes wonder if something could be done to help out my sibling(s), but I'm old enough to know now that somethings are just the way they are.
User avatar
SC Hoosier
Posts: 207
Joined: Mon Sep 03, 2012 5:38 pm
Location: South Carolina

Re: How to make this fair: gifting to kids with different me

Post by SC Hoosier »

BuckyBadger wrote:Lets say you want to start gifting to your kids before your death. You're a little hesitant to give too much away, though, as you're still healthy and active. If you need all your money then this all comes off the table and you spend your money!

Your kids a quite different - one went in a "traditional" track and makes quite a bit of money and saves a lot (kid A), one had more trouble settling down and makes enough to have a perfectly decent life but you'd like to encourage that one to save more (kid B).

You want to give the kid B enough money to fund a Roth every year (assume that the child does this as encouraged). Kid A doesn't really "need" that money right now (is saving WELL more than that amount already without parental help) but you want to make it fair in the end by bequesting more to kid A to make up for the previous yearly gifts to kid B. Parental intent is to not "punish" kid A for making more money that kid B - just to help out kid B earlier in life.

How would you do this to be fair to kid A in 20 or so years? Would it matter that kid B's gift money had been invested for that much time, or not because kid A is also investing that much and more for those 20 years and money is fungible? I really can't decide...
Just keep both of their money since kid A doesn't need it and you wanted kid B to not touch it. Keep it invested and they'll get it tax free upon your death, just like a Roth. Only you'll pay taxes on distributions in the mean time. No big deal.
I live in No Payment Land. It is wonderful, and I'd love for you to live here too.
JW-Retired
Posts: 7189
Joined: Sun Dec 16, 2007 11:25 am

Re: How to make this fair: gifting to kids with different me

Post by JW-Retired »

As retired parents we are gifting to kids because we have been savers and have more retirement income than we need. If they can make use of it now It seems silly for us to hang onto to all of it until they inherit. What's the fun in that?

Don't know what might be the perfectly "fair" approach for kids of different means, but IMO anything but equal would be hard for everyone involved to feel the same about. Equality is such a defensible choice that we can't imagine anybody in the family could be bothered by it. No explanation required.
JW
Retired at Last
Impromptu
Posts: 406
Joined: Mon Nov 03, 2014 9:09 pm

Re: How to make this fair: gifting to kids with different me

Post by Impromptu »

In the prodigal son parable, both the responsible and irresponsible sons were given equal portions of inheritance. One was responsible and the other wasted it.

On the other hand, you can let them fight for your love. Winner take all.
I'll gladly pay you Tuesday for a hamburger today.
island
Posts: 1971
Joined: Tue Jul 23, 2013 1:45 pm

Re: How to make this fair: gifting to kids with different me

Post by island »

noco-hawkeye wrote:......Here is another point of view - let's say kid A and B have kids of their own. And the signs are that A types tend to have A kids, and B types tend to have more B kids. If you help out the A kids, they might grow the resources by quite a bit. The B kids burn through the money with little to show and are back in trouble in a few years.

What is the better way to use the money in this type of situation? I'm not sure there is one correct answer......
And both generations of B's may need a hand out long after the original family benefactor passed. So better give equally because The A's may end up having to carry on the tradition of subsidizing The B's. Perish the thought! :oops:
User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: How to make this fair: gifting to kids with different me

Post by obgyn65 »

To the OP- please give the same amount of money to your children. My parents gave more to my brother because he was less successful financially than me. I no longer talk to him.
Last edited by obgyn65 on Thu Feb 12, 2015 4:45 am, edited 1 time in total.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
martiansteeler
Posts: 118
Joined: Mon Feb 17, 2014 11:32 am
Location: San Francisco, CA

Re: How to make this fair: gifting to kids with different me

Post by martiansteeler »

Van wrote:It also incentivizes the production of additional grandchildren.
Apparently you think this is a good thing. IMHO, the world is over populated already.[/quote]

Agreed. OH and I made a concious decision not to have (grand)children...while my parents may not like it, they have never once begged nor punished me for that decision.
User avatar
prudent
Moderator
Posts: 9079
Joined: Fri May 20, 2011 2:50 pm

Re: How to make this fair: gifting to kids with different me

Post by prudent »

I can imagine that a child who is quite well-off might not mind if others got more, particularly if it wasn't life-changing money. If someone has a net worth of $2 million and growing, it's pretty easy to take the high road if a share of $50,000 is divided unequally. However I don't think that would apply to very many people. For most, like has been said, unequal gifting can easily look like rewarding the child who made bad choices (if bad choices was the reason one child appeared to need more). And in most cases I bet the more needful child was getting extra economic care even before the gifting.

And I echo the thought that in a tight-knit family, it's surely possible to gift equally and have the more well-off child re-gift some to the other.
User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: How to make this fair: gifting to kids with different me

Post by obgyn65 »

I guess most people don't mind that some well off children from other families get more than others until it happens to THEM. It has nothing to do with money, by the way. It's only about love, sharing equally and fairly. And still so many parents get it wrong and then complain their kids don't get along. :happy
prudent wrote:I can imagine that a child who is quite well-off might not mind if others got more, particularly if it wasn't life-changing money. If someone has a net worth of $2 million and growing, it's pretty easy to take the high road if a share of $50,000 is divided unequally.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
JW-Retired
Posts: 7189
Joined: Sun Dec 16, 2007 11:25 am

Re: How to make this fair: gifting to kids with different me

Post by JW-Retired »

obgyn65 wrote:To the OP- please give the same amount of money to your children. My parents gave more to my brother because he was less successful financially than me. I no longer talk to him.
Care to explain a little? Is that because he always hits you up for still more $$, or something else?
JW
Retired at Last
anonforthis
Posts: 414
Joined: Sat Oct 19, 2013 1:45 pm

Re: How to make this fair: gifting to kids with different me

Post by anonforthis »

obgyn65 wrote:To the OP- please give the same amount of money to your children. My parents gave more to my brother because he was less successful financially than me. I no longer talk to him.

Wow. Must be nice to get any money at all.
jedblanks
Posts: 49
Joined: Tue Nov 12, 2013 2:14 pm

Re: How to make this fair: gifting to kids with different me

Post by jedblanks »

It sounds like Kid "A" is a lot more sensible. Would it be easier to just give to Kid "A" who will no doubt invest it with instructions to give a portion to Kid "B" when the time is right?

Or are they not that close?
jstrazzere
Posts: 260
Joined: Tue Feb 18, 2014 3:19 pm

Re: How to make this fair: gifting to kids with different me

Post by jstrazzere »

obgyn65 wrote:To the OP- please give the same amount of money to your children. My parents gave more to my brother because he was less successful financially than me. I no longer talk to him.
Very curious...
Are you punishing your parents by not talking to your brother?
Are you punishing your brother who received more?
If your parents gave the same amount to you and your brother would you be talking to each other now?

My parents helped my siblings more than me when they needed it. Yet I never, ever, felt any less loved, nor any resentment whatsoever.
I've always taught my sons that life is different for everyone. That life doesn't treat people equally. That they shouldn't measure their worth by dollars. That they should not feel unhappy because others have more.

Perhaps my experience is different because my family had very little growing up? Perhaps if my family were wealthy, our need for dollar-for-dollar equality would be higher?

I'm very surprised by this topic and some of the responses. Very interesting...
TheMoneyMan
Posts: 11
Joined: Thu Feb 12, 2015 9:11 pm

Re: How to make this fair: gifting to kids with different me

Post by TheMoneyMan »

Deleted
Last edited by TheMoneyMan on Sun Jan 24, 2021 12:07 pm, edited 1 time in total.
User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: How to make this fair: gifting to kids with different me

Post by obgyn65 »

There have been other issues with my brother which I won't get into as I don't want to highjack the thread.
JW Nearly Retired wrote:
obgyn65 wrote:To the OP- please give the same amount of money to your children. My parents gave more to my brother because he was less successful financially than me. I no longer talk to him.
Care to explain a little? Is that because he always hits you up for still more $$, or something else?
JW
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
Dandy
Posts: 6701
Joined: Sun Apr 25, 2010 7:42 pm

Re: How to make this fair: gifting to kids with different me

Post by Dandy »

Interesting discussion. for me equal doesn't always mean fair and money doesn't ever equal love.
As parents I feel our obligation is to try to help each child reach their potential - some need more help than others. This help comes in many forms, time, advice, money, company, etc.

At lot depends on how you were brought up and were treated as children. How was money viewed, how was love expressed etc.

I think the only difficult decision for us would be if a child in need was irresponsible. That would take a lot of soul searching, lots of love and lots of understanding on our part and the part of the more fortunate child. Fortunately we don't have that issue.
sls239
Posts: 1207
Joined: Thu Oct 23, 2008 4:04 pm

Re: How to make this fair: gifting to kids with different me

Post by sls239 »

I think the real flaw is that OPs parents think that handing kid B the money to fund a Roth IRA is something that encourages saving.

A better way to go about it would be to match funds - for what kid B puts into a Roth IRA, the parents match. That encourages saving, which is what the parents think the kid needs.
jstrazzere
Posts: 260
Joined: Tue Feb 18, 2014 3:19 pm

Re: How to make this fair: gifting to kids with different me

Post by jstrazzere »

Dandy wrote:for me equal doesn't always mean fair
Same here.
Conversely, fair doesn't always mean equal (for me).
KlangFool
Posts: 31426
Joined: Sat Oct 11, 2008 12:35 pm

Re: How to make this fair: gifting to kids with different me

Post by KlangFool »

http://www.getrichslowly.org/blog/2007/ ... m-and-dad/

TS,

I do not believe in giving the money to my children at all. If I am very rich, I may fund a scholarship fund for my grandchildren. Other than that, it is either I spend it all or I will donate to charity. The reason is that I do not believe those monetary gifts are helpful at all. In fact, it creates dependency that is harmful to my children.

There is a Chinese saying: Wealth never last more than 3 generations. I would rather donate my money to charity and create good Karma for my family.

In summary, besides funding for education, the children should get nothing. If they want something more, they should earn it like everyone else.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
northwoods1
Posts: 30
Joined: Tue Aug 28, 2012 8:21 am

Re: How to make this fair: gifting to kids with different me

Post by northwoods1 »

sls239 wrote:I think the real flaw is that OPs parents think that handing kid B the money to fund a Roth IRA is something that encourages saving.

A better way to go about it would be to match funds - for what kid B puts into a Roth IRA, the parents match. That encourages saving, which is what the parents think the kid needs.

This. If kid B has not demonstrated an interest in saving on his own, giving him money for a Roth will not magically make him interested in adding any of his own earned money to the savings pot.
Other potential negative outcomes are: Kid B may perceive this as a parent's interference in his affairs and resent it; kid B may remove money from the Roth as soon as possible and spend it on something other than saving, resulting in rift with parent; etc.
Often what parents see as financial "help" actually creates financial dependency in kid B - - my brother is kid B and parents are still "helping" him at age 60 because although he has always had a stable job he spends all his money. He has never had to learn good management because he's always had "help".

Another thing: if in the future your own (parental) circumstances change to the extent that YOU need help (e.g. extended medical care etc), it's going to be kid A who has to help fund you, not kid B.
IMO it's better to wait and leave money equally to all kids in your will.
Hug401k
Posts: 408
Joined: Fri Mar 28, 2014 7:49 pm

Re: How to make this fair: gifting to kids with different me

Post by Hug401k »

I can't imagine not splitting equally among children (with the exception of some sort of disability with one of the children).

I'm Kid A, and when my mother passed, she split everything equally. My bother is in the arts. He's responsibly broke.. he lives in NYC with a career in the fine arts. He's chosen to do what he loves, but be broke. I, on the other hand, would have also loved a career in the arts, but after a childhood of watching my mother wring her hands when the bills arrived, I had no stomach for being broke. I went into business, I save for an emergency, and I do fine. However, do I love what I do? No. Not at all. But if we need new car tires, no big deal. I feel like we both made sacrifices in a way, deciding what we could live with/without. I would be so sad if my mother had given him a higher % than me, as if he made the better decision, or we weren't viewed equally. My inheritance went into my kid's college funds so I wouldn't assume even the well off kids have no where useful for the money to go. His kids will qualify for financial aid, mine will probably not.

I also have 2 kids.. we will see who is A and who is B, but it will be split 50/50.
GoldenFinch
Posts: 2728
Joined: Mon Nov 10, 2014 10:34 pm

Re: How to make this fair: gifting to kids with different me

Post by GoldenFinch »

northwoods1 wrote:
sls239 wrote:I think the real flaw is that OPs parents think that handing kid B the money to fund a Roth IRA is something that encourages saving.

A better way to go about it would be to match funds - for what kid B puts into a Roth IRA, the parents match. That encourages saving, which is what the parents think the kid needs.

This. If kid B has not demonstrated an interest in saving on his own, giving him money for a Roth will not magically make him interested in adding any of his own earned money to the savings pot.
Other potential negative outcomes are: Kid B may perceive this as a parent's interference in his affairs and resent it; kid B may remove money from the Roth as soon as possible and spend it on something other than saving, resulting in rift with parent; etc.
Often what parents see as financial "help" actually creates financial dependency in kid B - - my brother is kid B and parents are still "helping" him at age 60 because although he has always had a stable job he spends all his money. He has never had to learn good management because he's always had "help".

Another thing: if in the future your own (parental) circumstances change to the extent that YOU need help (e.g. extended medical care etc), it's going to be kid A who has to help fund you, not kid B.
IMO it's better to wait and leave money equally to all kids in your will.
Good points.

This is such a difficult issue because there are unique circumstances in these situations and a likely emotional component. Clearly there are instances when parental gifts to a struggling child are accepted and encouraged by the whole family. In scenarios where Kid B is irresponsible, immature, or making repeated bad life decisions, the potential for resentment from siblings increases (big time because they also feel bad for their parents) and the potential for dependency on the part of Kid B is a likely negative consequence.
mak1277
Posts: 1762
Joined: Fri Jan 09, 2015 3:26 pm

Re: How to make this fair: gifting to kids with different me

Post by mak1277 »

I think this is very much about setting expectations ahead of time. Personally, I find myself agreeing with the posters who talk about no/limited inheritance for their children. That's the expectation I would set with my own children.

With regards to my own parents, at no time in my life have I ever expected to receive an inheritance. My mother felt that it was very important to leave money behind for my brother and I (which she did), but I never felt like there was any importance to it from my end. If, however, both Kids A & B expect a certain distribution (either in dollars or percentages) then I think you have to honor that. Otherwise, it's the parent's money to distribute as he/she pleases and equality isn't required as long as expectations are set.
RadAudit
Posts: 4384
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: How to make this fair: gifting to kids with different me

Post by RadAudit »

I find the posts in this thread to be remarkable. Remarkable in the sense that there are so many well adjusted and emotionally mature individuals posting on this forum.

I have been privileged to see the effects of unequal distributions of estates and unequal gifting. In a number of cases, the outcome wasn't pretty. And even when expectations were set prior to the distributions / gifts, feelings were hurt. And, yes, I know that the giver is within his rights to give as he sees fit; and, giver is not responsible for how the receiver feels.

I would just add in that a number of, if not most, cases kids keep score. They know. And some wrongly equate unequal distribution of funds as unequal regard for one sibling over another, in spite of what they say. So, if unequal distributions of financial assets are contemplated, I'd hope that somehow the difference is made up with other non-financial gifts that have meaning to both the giver and the receiver. I don't know how you do that.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
Elena78
Posts: 90
Joined: Thu Jul 19, 2012 3:58 pm

Re: How to make this fair: gifting to kids with different me

Post by Elena78 »

KlangFool wrote:http://www.getrichslowly.org/blog/2007/ ... m-and-dad/

TS,

I do not believe in giving the money to my children at all. If I am very rich, I may fund a scholarship fund for my grandchildren. Other than that, it is either I spend it all or I will donate to charity. The reason is that I do not believe those monetary gifts are helpful at all. In fact, it creates dependency that is harmful to my children.

There is a Chinese saying: Wealth never last more than 3 generations. I would rather donate my money to charity and create good Karma for my family.

In summary, besides funding for education, the children should get nothing. If they want something more, they should earn it like everyone else.

KlangFool
I find this approach very harsh. While I do think it's great to leave some inheritance to a charity, I also think it is a lovely final act to help with your children's financial security. After all, they might not turn out as lucky as you. What if the breadwinning spouse has a stroke and dies two weeks after you go? What if they both get terminal cancer at the same time while they still have minor children at home (which is happening to my friends right now)? It's not just about working hard, sometimes it's also luck, and passing some of that luck on is generous and the kind of thing I would like to do for my kids, the people I chose to bring into this world, if I can.
MrKnight
Posts: 266
Joined: Fri Dec 19, 2014 11:24 am

Re: How to make this fair: gifting to kids with different me

Post by MrKnight »

Your decendents are not the only possible needy people in the world. A donation to charity help the truly needy. I am not getting an inheritance (in fact my parents and family always hitting me up for money which I don't give) I am not leaving a inheritance to my children. I probably will spend and leave the rest to charity for animals or education. I'm not going to pay for my kids college neither. The fact that they had a comfortable upbringing is enough of an advantage compared to what I and many others ever had.
Post Reply