Transparency with Teen $

[2019istheyear]

I would love thoughts on this topic.

Disclaimer: I don’t want to go into specifics of where this money came from. It’s complicated.

I have a lower six figure account that is meant for my high schooler. He is unaware of this. The money came from an outside source (not a specific person) that was meant to benefit him but it is in my name. Yes I understand tax consequences and I had no choice that it was sent in my name. Teen wants to buy a car and I am on board and plan to let him use some of this money (he is still unaware). He is responsible but at the same time, spendy with what he has. I plan to give him the full amount of the car. But he’ll have to get a job to pay for licensing, repairs, upkeep, gas, registration.

My questions:

1. I have to put the car in my name due to his age. What happens down the line when he is older and I want to change title. Is the only option that we be taxed on “gifting” it to him?

2. More importantly I would love input on how to discuss the money I’m giving for the car. I’d like to be transparent on where it came from (think similar to a settlement) and it’s in an account meant for him but in my name. However I’m not ready to tell him the value of the account. I feel it could get messy, with him telling other people (or siblings). I also plan to save this money for important life events, such as if he buys a home or gets married, has a kid, college (but we have 529 too). Generally I like to be transparent, but in this case I’d rather explain where the $ came from and I’ll give a chunk for a car, but don’t want to discuss the rest. What’s the best way to handle this?

3. Lastly, what’s the best way to pass this money down to him in the future. I plan to consult a tax advisor down the line. Could I “gift” up the maximum allowable per year to avoid tax penalties?

Thank you in advance.

[zag00]

1) Put both names on the title? When it comes time to sell it, you'll just need to sign the title over to new buyer.

2) This may be ill-advised but i wouldn't disclose the value of anything. Rather, i would tell him you have X amount to spend on a car with the stipulations of maintenance/gas/insurance is on them you've laid out. Because the account is in your name and you're acting in good faith to give them the money for the life events you've mentioned. It's the responsible thing to do IMO, keep tabs on it until they show the maturity to handle this sum of money.

3) Gifting would be my suggestion, if not transferring once you come to the realization in the latter point of #2 above.

[Normchad]

Teens still have developing brains and personalities. These are real biological things and kind of dinette out until about 25 for males. It’s impairs their decision making.

Why does the car have to be in your name? I bought a car at 16 and it was titled in my name.

In your shoes, I wouldn’t tell the whole truth. I’d encourage their good behavior and school work, etc. have the talk about “I’m going to help you with this, but you need to be responsible and work to pay for gas, etc”.

And I’d save talking about the slush fund for a few years. An idea there though is to tell them you can gift them a part of it each year, and avoid all taxes. Or if they want more money faster, it’s on them to pay the taxes.

Honestly, I’d just not say anything unless absolutely necessary. Let thrm go to college and graduate. Then tell them…..

I’m not telling my kids squat until they’re at least 40. I don’t want fantasies of inheritances to get them off course…. I want them to be established in their careers, and successful on their own, before they catch an inkling.

[Kagord]

I would double check how the money was received, if it was written to you "for the benefit of", it may be under UTMA, you might have already, did you discuss with an attorney to confirm treatment or classification options?

[2019istheyear]

I would double check how the money was received, if it was written to you "for the benefit of", it may be under UTMA, you might have already, did you discuss with an attorney to confirm treatment or classification options?

It’s hard to explain why, but the $ is in my name only and I have zero obligation to pass it on to son. But of course ethically I consider it 100% his. It wasn’t that significant of an amount but has been invested since it was received at his birth. I’m thrilled at its growth and I’ll use that as an investment lesson when I decide to tell him the specifics.

[Kagord]

I would double check how the money was received, if it was written to you "for the benefit of", it may be under UTMA, you might have already, did you discuss with an attorney to confirm treatment or classification options?

It’s hard to explain why, but the $ is in my name only and I have zero obligation to pass it on to son. But of course ethically I consider it 100% his. It wasn’t that significant of an amount but has been invested since it was received at his birth. I’m thrilled at its growth and I’ll use that as an investment lesson when I decide to tell him the specifics.

OK, you mentioned "meant to benefit him", which could be implied as solely for his benefit, perhaps, IANAL.

Edit I've seen checks payable straight to a trustee (not a trust beneficiary), cashed by the trustee because the trustee thought it was theirs because that's how the check was payable to, not knowing the fiduciary duty was broken.

[Watty]

2. More importantly I would love input on how to discuss the money I’m giving for the car. I’d like to be transparent on where it came from (think similar to a settlement) and it’s in an account meant for him but in my name. However I’m not ready to tell him the value of the account. I feel it could get messy, with him telling other people (or siblings).

I assume that the siblings do not have a similar amount. If you buy a car for him then the siblings may rightfully be upset with both you and your kid if you do not also buy a car for them when they get to be that age even if they know the source of the funds. The kid which the money belongs to may also be upset with the way you handled the situation no matter what you do.


You have got a real mess and families have become estranged over a lot less.

Over the years I have heard of more families becoming estranged than I would have expected and often it was not over major issues like abuse or alcoholism.

It is not so much a financial issue as a relationship issue so it would be good to work with a family counselor to figure out how to handle all the family dynamics since this could blow up your family.

The mechanics of the finances will be relatively straightforward for a lawyer to set up, probably with some sort of trust which is likely what should have been done with the money years ago. If you die without special arraignments then your spouse may get the money or it may be split between all the siblings so it would be good to do this sooner than later.

[2019istheyear]

2. More importantly I would love input on how to discuss the money I’m giving for the car. I’d like to be transparent on where it came from (think similar to a settlement) and it’s in an account meant for him but in my name. However I’m not ready to tell him the value of the account. I feel it could get messy, with him telling other people (or siblings).

I assume that the siblings do not have a similar amount. If you buy a car for him then the siblings may rightfully be upset with both you and your kid if you do not also buy a car for them when they get to be that age even if they know the source of the funds. The kid which the money belongs to may also be upset with the way you handled the situation no matter what you do.


You have got a real mess and families have become estranged over a lot less.

Over the years I have heard of more families becoming estranged than I would have expected and often it was not over major issues like abuse or alcoholism.

It is not so much a financial issue as a relationship issue so it would be good to work with a family counselor to figure out how to handle all the family dynamics since this could blow up your family.

The mechanics of the finances will be relatively straightforward for a lawyer to set up, probably with some sort of trust which is likely what should have been done with the money years ago. If you die without special arraignments then your spouse may get the money or it may be split between all the siblings so it would be good to do this sooner than later.

The $ is already in our trust to go to son.

The siblings are all older and have cars passed down from other family members. And we’ve helped them financially with things we haven’t helped teen son with. I can only see a problem IF we were to tell teen about the value and/or give it to him and he were to brag.

[2019istheyear]

I would double check how the money was received, if it was written to you "for the benefit of", it may be under UTMA, you might have already, did you discuss with an attorney to confirm treatment or classification options?

It’s hard to explain why, but the $ is in my name only and I have zero obligation to pass it on to son. But of course ethically I consider it 100% his. It wasn’t that significant of an amount but has been invested since it was received at his birth. I’m thrilled at its growth and I’ll use that as an investment lesson when I decide to tell him the specifics.

OK, you mentioned "meant to benefit him", which could be implied as solely for his benefit, perhaps, IANAL.

Edit I've seen checks payable straight to a trustee (not a trust beneficiary), cashed by the trustee because the trustee thought it was theirs because that's how the check was payable to, not knowing the fiduciary duty was broken.

We consulted with a lawyer when the money was given. It’s definitely mine. All professionals keep telling me to stop referring to it as teens because it legally is not their money in any form. But in my eyes, it’s his.

[Watty]

It wasn’t that significant of an amount but has been invested since it was received at his birth.

After reading the other posts another question to be considered as having been a give for all of your kids since it was never put in his name.

For example a grandparent gave you the money when your first kid was born but died so that then never made futre gifts to later kids then it might not be unreasonable to think that there intent was that the gift was really intended for all of your kids. You would want to check with a lawyer but that might help the family dynamics.

[Mr. Rumples]

This is state specific. In VA, a vehicle can be gifted to a spouse, son, daughter or parent and avoid taxes: https://www.dmv.virginia.gov/sites/defa ... s/sut3.pdf

Regarding other issues, my parents were transparent with the money and I learned money management that way. We argued about many, many things, but not money. It's really child specific. (As an aside, my brother and I don't get along at all, but when it came to the estate, we agreed not to argue and we didn't.)

[barnaclebob]

Tell your child the right amount of truth.

The min amount of truth would probably be that you have X amount to spend on a car.

If you want to go further say that you have a certain amount of money set aside for his benefit and are spending some of it on a car. The money is legally mine but because of XYZ reasons I ethically consider it to be for your benefit.

If he asks about the amount and you want to get into that, say that its enough to provide a good safety net but not life changing and that he'll get access to it for/when _______________.

[tibbitts]

We consulted with a lawyer when the money was given. It’s definitely mine. All professionals keep telling me to stop referring to it as teens because it legally is not their money in any form. But in my eyes, it’s his.

If you had it to do over again... you should have concocted a totally fake but extremely detailed story that would have satisfied all the Boglehead "is it really his money or your money?" questions, so you could get to the issue you're actually asking about. Teenagers aren't the only ones who sometimes need a little... manipulation to get them to behave.

[LotsaGray]

You mention using this money to benefit DS p. Things like this car, education, home, etc.

First, do you ever intend to give it to him? Once he knows of it and esp. once an adult and on his own he might expect to control his own money.

Second, how are you paying for these things for any siblings? Do siblings have similar funds? If not, are you paying for these things from your pocket? Is it fair to have son buy his own car but then buy a car for his sister?

[livesoft]

If you die before your son reaches the age of majority, then who will be his guardian. One of his siblings?

Parents give their kids money for cars all the time. If you like, then you can only give him enough money for a decent but not extravagant vehicle. Are you worried that the car will be totaled soon after buying as happens in my neighborhood to kids who get cars?

[aristotelian]

I think what you've said here is fine. "You have some money intended for you but it was put in my name. I'm not comfortable telling you how much it is, but it is enough to purchase a car. We will determine next steps when you're ready."

I would not tell him anything you don't want the siblings to know as well because it is highly likely he tells them if you don't tell them first.

You can gift up to $13 million tax free, you just need to fill out a tax form.

[LotsaGray]

I would double check how the money was received, if it was written to you "for the benefit of", it may be under UTMA, you might have already, did you discuss with an attorney to confirm treatment or classification options?

It’s hard to explain why, but the $ is in my name only and I have zero obligation to pass it on to son. But of course ethically I consider it 100% his. It wasn’t that significant of an amount but has been invested since it was received at his birth. I’m thrilled at its growth and I’ll use that as an investment lesson when I decide to tell him the specifics.

OK, you mentioned "meant to benefit him", which could be implied as solely for his benefit, perhaps, IANAL.

Edit I've seen checks payable straight to a trustee (not a trust beneficiary), cashed by the trustee because the trustee thought it was theirs because that's how the check was payable to, not knowing the fiduciary duty was broken.

We consulted with a lawyer when the money was given. It’s definitely mine. All professionals keep telling me to stop referring to it as teens because it legally is not their money in any form. But in my eyes, it’s his.

It’s his but you are deciding where he will spend it AND did not make other kids spend their money on such things. So you might think you are treating it like his, but you are not. You are already treating it like it is yours. Based on your descriptions this is both legal and fine. However, at this point, I never tell him about these funds. His immediate response will likely be, you made me pay for XXX but did not make siblings do so. He will, rightfully imo, feel shafted.

What I would do is very different from your plans. I would buy or not buy the car as if these funds never existed. Eventually, I would start doling out the funds to him. When and how fast depends on his maturity and needs. But unless there is specific reason not to, I would eventually give him all of these funds. Though I would withhold what I pay in taxes.

[yankees60]

Tell your child the right amount of truth.

The min amount of truth would probably be that you have X amount to spend on a car.

If you want to go further say that you have a certain amount of money set aside for his benefit and are spending some of it on a car. The money is legally mine but because of XYZ reasons I ethically consider it to be for your benefit.

If he asks about the amount and you want to get into that, say that its enough to provide a good safety net but not life changing and that he'll get access to it for/when _______________.

Excellent concise advice!

[runner3081]

I think what you've said here is fine. "You have some money intended for you but it was put in my name. I'm not comfortable telling you how much it is, but it is enough to purchase a car. We will determine next steps when you're ready."

Not sure I like that approach. Kid may think it is millions and make poor choices knowing there is a back stop. May also elicit constant nagging about when he is ready.

I like the, you have xx to spend on a car approach better.

[aristotelian]

I think what you've said here is fine. "You have some money intended for you but it was put in my name. I'm not comfortable telling you how much it is, but it is enough to purchase a car. We will determine next steps when you're ready."

Not sure I like that approach. Kid may think it is millions and make poor choices knowing there is a back stop. May also elicit constant nagging about when he is ready.

I like the, you have xx to spend on a car approach better.

Well, if it were my I probably wouldn't be buying the car and wouldn't say anything. But if OP buys the car, I don't think they can avoid saying where the money comes from.

[runner3081]

I think what you've said here is fine. "You have some money intended for you but it was put in my name. I'm not comfortable telling you how much it is, but it is enough to purchase a car. We will determine next steps when you're ready."

Not sure I like that approach. Kid may think it is millions and make poor choices knowing there is a back stop. May also elicit constant nagging about when he is ready.

I like the, you have xx to spend on a car approach better.

Well, if it were my I probably wouldn't be buying the car and wouldn't say anything. But if OP buys the car, I don't think they can avoid saying where the money comes from.

Yeah, agree. I would not do either

[cosmos]

I am with other posters around male teen maturity/thinking etc with a car. That being said my folks would have never given me my own car no matter what but they did let me borrow theirs for work and stuff.

What our small group of friends did was we all chipped in and the one over 18 bought an old used car at the time (74 dodge monaco) that cost 300 bucks in 1989. We drove that thing into its final resting place over the course of 2 years but it was pretty fun and we did enjoy taking care of it because it was "ours". The legality of course was it was the older friends by law since he had the title but a fond memory overall.

[ETK517]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

[yankees60]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

My father helped me out financially in many ways. I know that he also did the same for my sister (and her husband). A few times he told me the details.

But I never expected us to be treated equally $$$$$-wise in any way. It was his money to use in any way that he wished. I was quite happy whenever I got any of it.

The major one was giving me half the cost of my house so that with me matching it I was able to own my (cheap) house debt-free from the start.

[ETK517]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

My father helped me out financially in many ways. I know that he also did the same for my sister (and her husband). A few times he told me the details.

But I never expected us to be treated equally $$$$$-wise in any way. It was his money to use in any way that he wished. I was quite happy whenever I got any of it.

The major one was giving me half the cost of my house so that with me matching it I was able to own my (cheap) house debt-free from the start.

Wasn't meaning to suggest that siblings should get perfectly equal treatment - that is impossible. But this is a parent earmarking hundreds of thousands of dollars for one minor child and planning to hide it from siblings for reasons, whatever they are, that aren't based on different financial needs or situations, which is the typical reason why over time things aren't equal. It's more akin to a parent leaving unequal amounts to children in a will which is routinely and, IMO and experience, correctly criticized here as almost certain to lead to conflict and hurt - especially when you aren't transparent about the reasoning.

[yankees60]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

My father helped me out financially in many ways. I know that he also did the same for my sister (and her husband). A few times he told me the details.

But I never expected us to be treated equally $$$$$-wise in any way. It was his money to use in any way that he wished. I was quite happy whenever I got any of it.

The major one was giving me half the cost of my house so that with me matching it I was able to own my (cheap) house debt-free from the start.

Wasn't meaning to suggest that siblings should get perfectly equal treatment - that is impossible. But this is a parent earmarking hundreds of thousands of dollars for one minor child and planning to hide it from siblings for reasons, whatever they are, that aren't based on different financial needs or situations, which is the typical reason why over time things aren't equal. It's more akin to a parent leaving unequal amounts to children in a will which is routinely and, IMO and experience, correctly criticized here as almost certain to lead to conflict and hurt - especially when you aren't transparent about the reasoning.

My sister and I not once ever discussed how much money we'd each received from my father. Therefore, no family conflict there.

[2019istheyear]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

Who said nice car?

[Beensabu]

We consulted with a lawyer when the money was given. It’s definitely mine. All professionals keep telling me to stop referring to it as teens because it legally is not their money in any form. But in my eyes, it’s his.

Well, that makes it easy.

Give him some of the money when he asks for money / needs money for a large expense until there is no more of the money left or you die and he inherits it via trust.

[ETK517]

If you're going to tell your son, you should explain the situation to all your children directly rather than create a family secret that will be inevitably revealed and will sow even more division when it is than if you'd just been honest in the first place. If you're not comfortable being transparent about why your son gets a nice car while his siblings drive hand-me-downs, that speaks volumes.

My father helped me out financially in many ways. I know that he also did the same for my sister (and her husband). A few times he told me the details.

But I never expected us to be treated equally $$$$$-wise in any way. It was his money to use in any way that he wished. I was quite happy whenever I got any of it.

The major one was giving me half the cost of my house so that with me matching it I was able to own my (cheap) house debt-free from the start.

Wasn't meaning to suggest that siblings should get perfectly equal treatment - that is impossible. But this is a parent earmarking hundreds of thousands of dollars for one minor child and planning to hide it from siblings for reasons, whatever they are, that aren't based on different financial needs or situations, which is the typical reason why over time things aren't equal. It's more akin to a parent leaving unequal amounts to children in a will which is routinely and, IMO and experience, correctly criticized here as almost certain to lead to conflict and hurt - especially when you aren't transparent about the reasoning.

My sister and I not once ever discussed how much money we'd each received from my father. Therefore, no family conflict there.

That's great. But it's not what happens in most families where a parent secretly gives lots of money to one child and excludes the others. I work in trust and estate disputes, so I see it all the time.