When do you start gifting the max to your family members? When is enough NW totally enough?

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Prettyfrtnt
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When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Prettyfrtnt » Sat Sep 07, 2019 10:23 pm

Just curious when you guys think your portfolio is high enough so that you pass all of the fire tests and based on your age feel like you should give every one in your life 14k who would be in your estate. I’m not in this position yet but I’m curious if there is a benchmark... a benchmark based on your age and your net worth. Thinking about my parents and my kids in this scenario. Wondering if I might be there in x number for years.

Others must have considered this.

Something like the simple fire thing x25 (4pct drawdown) or x28 (3.5 pct drawdown) or x32 based on annual spending and then net worth. I mean obviously if I have 100x NW to annual needs it would be obvious that I had “extra”. Maybe I’ve answered my own question once NW is 32X annual spending you have “extra”

This could be extended to charitable gifting. When is enough totally enough???
Last edited by Prettyfrtnt on Sat Sep 07, 2019 11:08 pm, edited 7 times in total.

123
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Re: When do you start gifting the max to your family members you like?

Post by 123 » Sat Sep 07, 2019 10:26 pm

I don't think I would gift to my kids in this situation unless I was absolutely sure they did NOT need it. It is way too easy to destroy motivation and self-reliance with the expectation of regular gifts and or substantial inheritance.
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Re: When do you start gifting the max to your family members you like?

Post by Prettyfrtnt » Sat Sep 07, 2019 10:30 pm

123 wrote:
Sat Sep 07, 2019 10:26 pm
I don't think I would gift to my kids in this situation unless I was absolutely sure they did NOT need it. It is way too easy to destroy motivation and self-reliance with the expectation of regular gifts and or substantial inheritance.
Thanks for your response but as a person with your perspective I’d only be gifting a kid that was clearly on a path that I admired and had a very strong ethic and character and desire and on a path I saw as useful productive and in a situation where the 14k would simply help some. No video games and fast food worker gifting. And yes think about parents on fixed incomes (non BHs)...

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Re: When do you start gifting the max to your family members you like?

Post by PhilosophyAndrew » Sat Sep 07, 2019 10:43 pm

Isn’t the answer: Whenever you want to?

This isn’t the case where there will be a uniform or recommended financial guideline; whether it is advisable to do this, and exactly when to do this, depends on many factors, mainly non-financial ones, and mainly ones that are sensitive to families’ and individuals’ specific circumstances.

Andy.

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Re: When do you start gifting the max to your family members you like?

Post by MotoTrojan » Sat Sep 07, 2019 10:45 pm

I’d say a big factor is expected life remaining. Maybe a ratio of multiples of expenses over expected years would help decide. If I’m 40x but have 50 years that’s different than 40x and 85 years old.

Also unless you have over the estate limit, why limit yourself to the gift limit.

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Re: When do you start gifting the max to your family members you like?

Post by Prettyfrtnt » Sat Sep 07, 2019 11:06 pm

MotoTrojan wrote:
Sat Sep 07, 2019 10:45 pm
I’d say a big factor is expected life remaining. Maybe a ratio of multiples of expenses over expected years would help decide. If I’m 40x but have 50 years that’s different than 40x and 85 years old.

Also unless you have over the estate limit, why limit yourself to the gift limit.
Assume expected way over the estate limit on 90% of the fire calculators.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Gnirk » Sat Sep 07, 2019 11:59 pm

It depends on time left, and how much more you will need to cover those years of expenses taking into account income sources such as SS, pensions, investments, and real estate. My mom gifted the max each year to her family when it was determined she had more than enough to cover any and all unexpected expenses including long term care until the age of 107. She then gifted to family members...children and grandchildren...until her net worth was below Washington’s estate tax threshold. Her assets were nowhere near the Federal Estate Tax threshold.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by SGM » Sun Sep 08, 2019 1:13 am

The maximum was increased to $15,000 per year per person. If you had two children you could gift each child $15,000. If you were married your spouse could also give each child $15,000 a year. One could also pay tuition and medical costs directly and not to the individual and it would not count towards the $15,000 per year.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by sport » Sun Sep 08, 2019 1:37 am

Before you start giving your money away, you should be sure that you have enough for long term care (for two if married). Normal annual expenses are not the whole story. There can be other irregular expenses that also need to be considered, such as replacing vehicles, new roof on the house, etc.

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Re: When do you start gifting the max to your family members you like?

Post by Wiggums » Sun Sep 08, 2019 3:10 am

PhilosophyAndrew wrote:
Sat Sep 07, 2019 10:43 pm
Isn’t the answer: Whenever you want to?

This isn’t the case where there will be a uniform or recommended financial guideline; whether it is advisable to do this, and exactly when to do this, depends on many factors, mainly non-financial ones, and mainly ones that are sensitive to families’ and individuals’ specific circumstances.

Andy.
I agree.

You have to be comfortable that your remaining assets are more than enough. my in-laws give away much more than I would. They are ok with a much smaller cushion.

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Re: When do you start gifting the max to your family members you like?

Post by smitcat » Sun Sep 08, 2019 6:20 am

Prettyfrtnt wrote:
Sat Sep 07, 2019 10:30 pm
123 wrote:
Sat Sep 07, 2019 10:26 pm
I don't think I would gift to my kids in this situation unless I was absolutely sure they did NOT need it. It is way too easy to destroy motivation and self-reliance with the expectation of regular gifts and or substantial inheritance.
Thanks for your response but as a person with your perspective I’d only be gifting a kid that was clearly on a path that I admired and had a very strong ethic and character and desire and on a path I saw as useful productive and in a situation where the 14k would simply help some. No video games and fast food worker gifting. And yes think about parents on fixed incomes (non BHs)...
I believe the devil is in the details...
As you posted you would like to gift "everyone who would be in your estate" but you also say that you would not gift if they were not a clear path that you admired.
How would you hold back to one or some persons in your future estate and how would you determine what were the minimal levels to be admired?

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by HomeStretch » Sun Sep 08, 2019 6:32 am

There is no benchmark, it’s a personal decision. IMO when/if someone starts gifting to family depends on the giftor’s net worth, age and having a very solid handle on financial projections. It also depends on the giftee’s age/situation too.

It looks like you are age 40 per a prior post. A person age 40 most likely has a long remaining life span. I wouldn’t consider gifting at that age unless the portfolio was in excess of 50x expenses (which reflected solid estimates of post-retirement expenses like healthcare and long-term care). Also, any children of a 40-year old are likely too young to benefit in a good way from ongoing gifts aside from paying their education and support until self-sufficient.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Sun Sep 08, 2019 6:46 am

We began doing this when we moved to Massachusetts, where the estate tax cliff is $1M. A Crummy Trust is being set up for future gifts to fund. We have enough to not worry about needing the money.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by drzzzzz » Sun Sep 08, 2019 7:31 am

Interesting question and as I think about it earlier might be more advantageous for us since Pennsylvania has an inheritance tax of 12% on transfers to siblings or other non-direct lineals (even gifts to your adult children get taxed) at the time of death. I also find gifts can be more valuable for relatives who have money worries now or need the money rather than waiting for me to go. Lastly, some of my recent gifting has involved appreciated stocks or mutual funds that I bought years ago and give off inefficient dividends or capital gains which will be taxed at my relatives lower tax brackets - at the same time it is helping to simplify my portfolio.
Last edited by drzzzzz on Sun Sep 08, 2019 7:58 am, edited 2 times in total.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by RobLyons » Sun Sep 08, 2019 7:43 am

Congrats to those above in this very fortunate position. I wanted to give my own view on this, coming from a totally different financial position.
Mid 30s, don't think I will ever be FIRE, early retirement at age 62 would be a blessing but because of health care, 65 is more likely.

First I never even heard of this annual gifting but it made me think of when I started "helping" family members was very early on for me. Annually I've spent a thousand or more helping my parents and in laws with bills, home improvement, etc just because it's the right thing to do. They never became "dependent" upon our help but these were better gifts than a neck tie or Christmas sweater.

Alternatively, a sibling is very well off, mid 40s and could've retired years ago, does not give a cent.

Just interesting to see how people view this, and to answer the question I'd say as soon as you want, despite whatever calculations you come up with :D
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by smitcat » Sun Sep 08, 2019 8:08 am

drzzzzz wrote:
Sun Sep 08, 2019 7:31 am
Interesting question and as I think about it earlier might be more advantageous for us since Pennsylvania has an inheritance tax of 12% on transfers to siblings or other non-direct lineals (even gifts to your adult children get taxed) at the time of death. I also find gifts can be more valuable for relatives who have money worries now or need the money rather than waiting for me to go. Lastly, some of my recent gifting has involved appreciated stocks or mutual funds that I bought years ago and give off inefficient dividends or capital gains which will be taxed at my relatives lower tax brackets - at the same time it is helping to simplify my portfolio.
FWIW...
7 Simple Ways to Minimize the Pennsylvania Inheritance Tax
Set up joint accounts with the people you wish to benefit. ...
Gift your assets to your children. ...
Buy extra life insurance. ...
Utilize life insurance to give money to beneficiaries who are taxed at the highest tax rates. ...
Buy real estate outside of Pennsylvania. ...
Pay the PA inheritance tax early. ...
Convert your IRA to a Roth IRA.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by EnjoyIt » Sun Sep 08, 2019 8:40 am

#1 I would wait until I had 25x after the next recession hits. This would make me secure enough in my wealth to comfortably be able to gift some of money away.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by JustSomeDude » Sun Sep 08, 2019 8:41 am

I use a variant of the 4% SWR. We spend what we need for a comfortable lifestyle in retirement. Then we look at a 4% target spending level. If we are not spending at that level, we gift to children or charity. If it is a bad year, we gift less. The money is most helpful to young adults starting their lives. Home down payments, a safe reliable car, no student loans etc greatly increases the quality of their lives. The money will be less useful to them late in life.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by maroon » Sun Sep 08, 2019 8:57 am

I have no clue. My MIL lives on SS with supplements from us. My parents advised me for many years that they plan to spend all their money and I shouldn't expect any inheritance. Fine, but now they're running out of money, too.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Dandy » Sun Sep 08, 2019 9:00 am

I am fortunate to have enough pension and SS income to basically meet our normal expenses and a nice investment/savings portfolio. I basically don't need my RMD. My two children and husbands are employed, hard working and manage money well. I have two grandchildren. But, we live in a high cost of living area and children are expensive -- more so when both parents work e.g. child care, after care etc. One has a large mortgage - the house is modest but located in a nice neighborhood.

I am 71 - so I could easily just give generous birthday or holiday gifts and maybe in 20 years they would both inherit a bundle. I certainly don't want to short change our ability to pay for our own expenses and even higher end of life challenges in that regard.

We decided to gift 'early inheritance' to them each year. We met discussed our financial picture (partly so that they would understand that we were able to do this and partly for them to start to understand our finances so that as we age they would be in a position to help us manage - if/when needed). So we gift them a large percentage of our RMD after taxes with no strings or guarantees going forward - we also outline our finances at the time of the gift. We are going on our 3rd year of this approach.

This has been great so far. We don't need the money but it is a time of life when it will really help them with expenses and making sure they can continue to invest for the future. It has been great for us since we can see them enjoy life a bit more with a bit less worry about day to day finances. Is it a bit awkward. Sure, I never discussed our finances or investments with anyone. We live a modest life so our kids had no idea of our financial situation. But, I want them to know our finances since my wife is not investment savvy and if/when I start mental decline I want them to be able to step in.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by AlohaJoe » Sun Sep 08, 2019 9:27 am

Prettyfrtnt wrote:
Sat Sep 07, 2019 10:23 pm
Something like the simple fire thing x25 (4pct drawdown) or x28 (3.5 pct drawdown) or x32 based on annual spending and then net worth. I mean obviously if I have 100x NW to annual needs it would be obvious that I had “extra”. Maybe I’ve answered my own question once NW is 32X annual spending you have “extra”
This is what I do, though I use a systematic withdrawal plan to give me guidelines on how much is available each year for giving. For instance you can look at VPW or just a simple "5% of the current portfolio value". If that simple calculation says "you can spend $180,000 this year" but your actual expenses, including vacations and hobbies, are only $130,000 then you have $50,000 available for gifting this year. You obviously don't have to gift all of that, especially at first, but I find it a useful antidote to the extreme fiscal conservatism many of us naturally have.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Sandtrap » Sun Sep 08, 2019 9:34 am

Any net worth warrants careful estate planning with family dynamics in mind.

Gifting, or other disbursements to beneficiaries is more relevant to the nature of each beneficiary rather than asset size.

Seek legal counsel for estate planning and evaluate and modify as time and financial conditions change. When to do this is not asset size dependent.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by goodenyou » Sun Sep 08, 2019 3:56 pm

Age, burn rate and the values of those receiving it. We have been very fortunate to receive gifting from a family member (no spouse) that doesn't "need" it. Either do we. We already have enough, and the gifting will make no material difference in our quality of life. So, the person gifting it to us believes we will be good stewards of their fortune, and is beginning to draw down their estate. If my kids continue on the right trajectory, I hope to give it to them earlier to possibly make a material difference in their lives. That would include covering the costs of education for our grandchildren, if needed.
Last edited by goodenyou on Sun Sep 08, 2019 4:12 pm, edited 1 time in total.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by EnjoyIt » Sun Sep 08, 2019 4:11 pm

In regards to our children, how do we know giving them financial assistance is going to help them or harm them. Ok, coming out of school debt free seems like a good idea. What about buying a car when they get their first job or helping with a mortgage down payment? Are we making their lives better or are we making those kids dependent on those handouts to live the lifestyle we are helping supply? On the other hand, you wait too long and the money can be almost meaningless. Today, if my parents started giving me $14k/yr, it would be nice, but it won't make much of a difference for us. On the other extreme, if I started receiving $14k/yr while in undergrad, I very well may have blown it away on really stupid things and not reach the success we have today. Who the heck knows?

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Broken Man 1999 » Sun Sep 08, 2019 4:19 pm

EnjoyIt wrote:
Sun Sep 08, 2019 4:11 pm
In regards to our children, how do we know giving them financial assistance is going to help them or harm them. Ok, coming out of school debt free seems like a good idea. What about buying a car when they get their first job or helping with a mortgage down payment? Are we making their lives better or are we making those kids dependent on those handouts to live the lifestyle we are helping supply? On the other hand, you wait too long and the money can be almost meaningless. Today, if my parents started giving me $14k/yr, it would be nice, but it won't make much of a difference for us. On the other extreme, if I started receiving $14k/yr while in undergrad, I very well may have blown it away on really stupid things and not reach the success we have today. Who the heck knows?
I would think after observing your children for the first 18 to 22 years of their life one would have been able to determine a great deal of what to expect from them going forward. Sure, sometimes they might fall off the rails, but I don't think there will be radical changes in their character and life path.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Sun Sep 08, 2019 4:27 pm

For our child who is immature, but essentially a good kid, we are setting up a Crummey Trust with spendthrift provisions. Costs a bit more than an outright gift, but worth it IMO.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by goodenyou » Sun Sep 08, 2019 4:44 pm

It gets a bit complicated in marriage too. Your gifts can become community property, if you don't set it up to be otherwise.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by LadyGeek » Sun Sep 08, 2019 5:53 pm

This thread is now in the Personal Finance (Not Investing) forum (estate planning).
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Re: When do you start gifting the max to your family members you like?

Post by lotusflower » Sun Sep 08, 2019 7:55 pm

Prettyfrtnt wrote:
Sat Sep 07, 2019 10:30 pm
Thanks for your response but as a person with your perspective I’d only be gifting a kid that was clearly on a path that I admired and had a very strong ethic and character and desire and on a path I saw as useful productive and in a situation where the 14k would simply help some. No video games and fast food worker gifting. And yes think about parents on fixed incomes (non BHs)...
You can do what you like, but for me this seems like a great way to sow resentment among the winners and losers among your family (note that the winners are basically already winning, you are just making it impossible for the losers to catch up). This seems like a "the road to hell is paved with good intentions" type of situation.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by blockdoc » Sun Sep 08, 2019 8:19 pm

We set up a trust for our child, and have been giving the max (2/3 to the trust, 1/3 to the 529) since the child was 1 year old. That was long before we had reached financial independence. Both of us have received help from our families while pursuing rather extensive and meandering educational paths and it did not ruin us! So we weren't worried overly about that aspect (but prudence dictated setting up a trust with significant delay until the child will gain full control of the money). Regarding our personal finances, we felt that we owed it to our families to 'pay it forward' and do what we could to facilitate matters for our child.

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Re: When do you start gifting the max to your family members you like?

Post by Stinky » Sun Sep 08, 2019 8:25 pm

Prettyfrtnt wrote:
Sat Sep 07, 2019 10:30 pm

I’d only be gifting a kid that was clearly on a path that I admired and had a very strong ethic and character and desire and on a path I saw as useful productive and in a situation where the 14k would simply help some. No video games and fast food worker gifting. And yes think about parents on fixed incomes (non BHs)...
I definitely wouldn't be favoring one child over another. The result would be to build resentment between siblings that could last for decades to come, even after you have passed away.

Come to think of it, I wouldn't plan to ever come near the max gift to family members. I want my adult children to be able to stand on their own two feet - not to rely upon parents for supporting their lifestyle.

We'll be generous with birthday and Christmas gifts to adult children. But not generous enough to move them into a higher lifestyle.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Taylor Larimore » Sun Sep 08, 2019 9:29 pm

Prettyfrtnt:

When we were about age 80 my wife and I purchased two Single Premium Immediate Annuities (SPIAs) which, with our social security, pension (and good health insurance), we felt we had enough to provide an adequate income for the rest of our lives.

With our income secured, we began giving our children a monthly allowance. The idea was that we wanted to help our heirs when they needed the money instead of making them wait until we died. It made us happy and our children are very grateful.

A similar plan might work for you.

Best wishes.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by MarkerFM » Mon Sep 09, 2019 9:22 am

I agree with those who say there is no magic formula and that you also need to make sure your gifts don't have unintended consequences.

We have much more than we will ever need by any calculation. Our mid-20's children are on their own, working, and doing fine. However, we don't want to start giving them money until 1) they are ready to handle it properly and 2) we are sure it won't affect their motivation. As they get older, we think both are moving towards meeting the second criterion. The jury is still out on the first. We gave both a small "test" amount a few years ago with the strong suggestion they both save/invest the amount. They both spent it on wants, not needs. One is in finance and seems to have a grasp on numbers, planning etc. The other does not, and is not motivated to yet. We still have plenty of time.

My brother, who probably doesn't have as high a net worth but has a very large pension, has taken the opposite tack. He is giving each of his similar-age children a monthly stipend that actually exceeds the annual exclusion. For one, it is their sole source of income. For another, it exceeds their income from working, and for the third it is probably 40% of their work income. No clue what they are doing with it, but I expect the first two mentioned are spending it and the third is probably saving all of it.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by michaelingp » Mon Sep 09, 2019 10:46 am

Broken Man 1999 wrote:
Sun Sep 08, 2019 4:19 pm

I would think after observing your children for the first 18 to 22 years of their life one would have been able to determine a great deal of what to expect from them going forward. Sure, sometimes they might fall off the rails, but I don't think there will be radical changes in their character and life path.
I agree with this, although I would use 30 as the age they are finally "cooked". At that age I don't believe I have any more influence as a parent in terms of their character. For those that feel that giving kids money will change their character (e.g. make them less independent, unravel the work ethic, etc.) think about what happened to you when you inherited from your parents or were gifted. Maybe it helped pay for the new car, or just went into your three-fund investment account, but did it in any way change your character?

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Gnirk » Mon Sep 09, 2019 12:52 pm

Sometimes gifting to family members is the result of necessity and unfortunate circumstances.

My ex-husband, oldest daughter, and I currently gift monthly to our youngest daughter, who struggles with employment since she was diagnosed with severe bi-polar disorder 7 years ago. Prior to her first horrible incidence with this mental illness in 2012, she led a stellar productive life, both personally and professionally. Since then, she has struggled with maintaining employment, and has what we call a "new reality". Medications control her illness, but also affect her executive functions and creativity.

Our gifts come from necessity; she doesn't squander money, and it hurts her that she is currently supported by her family while she looks for work. Our oldest daughter understands the situation, is not in any way resentful of our cash gifts, and is also gifting a smaller sum each month to her sister.

We feel blessed that we are in a financial position to help our adult child.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by TomatoTomahto » Mon Sep 09, 2019 1:01 pm

Gnirk wrote:
Mon Sep 09, 2019 12:52 pm
We feel blessed that we are in a financial position to help our adult child.
And blessed to have raised a thoughtful older daughter. Let’s hope that the treatments for mental illness continue to improve.
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by goodenyou » Mon Sep 09, 2019 8:53 pm

Gnirk wrote:
Mon Sep 09, 2019 12:52 pm
Sometimes gifting to family members is the result of necessity and unfortunate circumstances.

My ex-husband, oldest daughter, and I currently gift monthly to our youngest daughter, who struggles with employment since she was diagnosed with severe bi-polar disorder 7 years ago. Prior to her first horrible incidence with this mental illness in 2012, she led a stellar productive life, both personally and professionally. Since then, she has struggled with maintaining employment, and has what we call a "new reality". Medications control her illness, but also affect her executive functions and creativity.

Our gifts come from necessity; she doesn't squander money, and it hurts her that she is currently supported by her family while she looks for work. Our oldest daughter understands the situation, is not in any way resentful of our cash gifts, and is also gifting a smaller sum each month to her sister.

We feel blessed that we are in a financial position to help our adult child.
This is the very unknown when it comes to planning for the future. The unexpected needs of loved ones. The best-laid plans of mice and men often go awry.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

Gnirk
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by Gnirk » Mon Sep 09, 2019 9:44 pm

TomatoTomahto wrote:
Mon Sep 09, 2019 1:01 pm
Gnirk wrote:
Mon Sep 09, 2019 12:52 pm
We feel blessed that we are in a financial position to help our adult child.
And blessed to have raised a thoughtful older daughter. Let’s hope that the treatments for mental illness continue to improve.
Thank you; we are.

delamer
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by delamer » Mon Sep 09, 2019 9:46 pm

We’d need to have enough in savings to cover a few years of assisted living/nursing care, in addition to the money needed to support our regular expenses (net of pensions/Social Security).

Which we have. But we don’t gift the max.

Annually, we gift to replace any money our adult kids contribute to their IRAs.

Irregularly, we’ll gift to help with major purchases like vehicles, house downpayments, and grandchildren’s college costs.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by LilyFleur » Mon Sep 09, 2019 10:17 pm

delamer wrote:
Mon Sep 09, 2019 9:46 pm
We’d need to have enough in savings to cover a few years of assisted living/nursing care, in addition to the money needed to support our regular expenses (net of pensions/Social Security).

Which we have. But we don’t gift the max.

Annually, we gift to replace any money our adult kids contribute to their IRAs.

Irregularly, we’ll gift to help with major purchases like vehicles, house downpayments, and grandchildren’s college costs.
I like your approach with the IRAs. That way you are helping them get into the habit of saving.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by msk » Mon Sep 09, 2019 10:36 pm

LOL. Saving for what if you are leaving them an inheritance in the millions anyway? At a certain point in life (advanced age, high NW) an extra $ has much less utility value to you than to your heirs. For Wants rather than Needs. Once you have taken care of your needs (e.g. pension/annuities, etc.), what would an extra few tens or hundred k$ annually do for you? You could blow $500k on a Rolls Royce Phantom or you could just gift it to your heirs as monthly stipends. As a BH, what would bring you more joy? Add a Ferrari next year too? Fly First Class for yourself and DW or pack the grandkids on an Economy flight to Hawaii? At a certain age you come to realize that all that NW is soon going to the kids anyway and you will not be around to see them enjoying it. Better start handing it over slowly. And if things go awry and you need the $, well, just stop the gifting. There is no magic number for NW but I see it more as the relative utility value for the extra $. A $ at age 65 has much higher utility value for Wants than at age 85.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by LilyFleur » Mon Sep 09, 2019 11:07 pm

msk wrote:
Mon Sep 09, 2019 10:36 pm
LOL. Saving for what if you are leaving them an inheritance in the millions anyway? At a certain point in life (advanced age, high NW) an extra $ has much less utility value to you than to your heirs. For Wants rather than Needs. Once you have taken care of your needs (e.g. pension/annuities, etc.), what would an extra few tens or hundred k$ annually do for you? You could blow $500k on a Rolls Royce Phantom or you could just gift it to your heirs as monthly stipends. As a BH, what would bring you more joy? Add a Ferrari next year too? Fly First Class for yourself and DW or pack the grandkids on an Economy flight to Hawaii? At a certain age you come to realize that all that NW is soon going to the kids anyway and you will not be around to see them enjoying it. Better start handing it over slowly. And if things go awry and you need the $, well, just stop the gifting. There is no magic number for NW but I see it more as the relative utility value for the extra $. A $ at age 65 has much higher utility value for Wants than at age 85.
I agree. I think it is more fun to see my children enjoy my gifts to them while I am still alive.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by PhilosophyAndrew » Tue Sep 10, 2019 8:47 am

Ought one to maximize the utility value of one’s spending?
Why? If so, the utilitarian Peter Singer’s “The Life You Can Save” project probably is a much better way to do that than giving money to family members. (See URL https://www.thelifeyoucansave.org for more on his utility-driven project.)

Or should one seek to maximize the joy one receives from
consumption (or delayed consumption)? This seems quite different from maximizing the utility of one’s spending.

To me, decisions to invest, consume, or give away one’s wealth seem much more complex than following one of these principles. Perhaps applying some principle or another can help in a specific situation, but it isn’t cleare that the concept of utility (or of joy) or the distinction between wants and needs address the complexities of the decision that OP want to make.

I agree with your broader point that the giver and recipient may both value highly significant gifts given before the giver’s death, but don’t think this issue trumps the many other considerations that folks have raised in this thread — to me, this seems a particular decision rooted in a specific context rather than one that can be decided by appealing to a single principle or factor.


Andy.



msk wrote:
Mon Sep 09, 2019 10:36 pm
LOL. Saving for what if you are leaving them an inheritance in the millions anyway? At a certain point in life (advanced age, high NW) an extra $ has much less utility value to you than to your heirs. For Wants rather than Needs. Once you have taken care of your needs (e.g. pension/annuities, etc.), what would an extra few tens or hundred k$ annually do for you? You could blow $500k on a Rolls Royce Phantom or you could just gift it to your heirs as monthly stipends. As a BH, what would bring you more joy? Add a Ferrari next year too? Fly First Class for yourself and DW or pack the grandkids on an Economy flight to Hawaii? At a certain age you come to realize that all that NW is soon going to the kids anyway and you will not be around to see them enjoying it. Better start handing it over slowly. And if things go awry and you need the $, well, just stop the gifting. There is no magic number for NW but I see it more as the relative utility value for the extra $. A $ at age 65 has much higher utility value for Wants than at age 85.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by delamer » Tue Sep 10, 2019 9:23 am

LilyFleur wrote:
Mon Sep 09, 2019 10:17 pm
delamer wrote:
Mon Sep 09, 2019 9:46 pm
We’d need to have enough in savings to cover a few years of assisted living/nursing care, in addition to the money needed to support our regular expenses (net of pensions/Social Security).

Which we have. But we don’t gift the max.

Annually, we gift to replace any money our adult kids contribute to their IRAs.

Irregularly, we’ll gift to help with major purchases like vehicles, house downpayments, and grandchildren’s college costs.
I like your approach with the IRAs. That way you are helping them get into the habit of saving.
And even though, obviously, it frees up money for them to spend on “stuff” or entertainment, it feels as if we contributing to their long-term financial security rather than just to their consumption.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by michaeljc70 » Tue Sep 10, 2019 3:58 pm

My parents started when they turned 70. Their pensions cover all their expenses easily so NW wasn't such a big factor. However, my parents did get an inheritance around the same time and of course RMDs also started increasing cash flow also.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by goodenyou » Wed Sep 11, 2019 8:41 am

The obvious answer is when your family members become registered and contributing Bogleheads. :D
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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by elcadarj » Wed Sep 11, 2019 8:53 am

WWWBD?

Lot's of Buffett fans here so here's a quote from this article in Forbes, doesn't help with the NW question but gives a idea as to, "should I give and how much?": https://archive.fortune.com/magazines/f ... /index.htm ETA: The article also discusses when.

"Buffett is not cutting his children out of his fortune because they are wastrels or wantons or refuse to go into the family business -- the traditional reasons rich parents withhold money. Says he: ''My kids are going , to carve out their own place in this world, and they know I'm for them whatever they want to do.'' But he believes that setting up his heirs with ''a lifetime supply of food stamps just because they came out of the right womb'' can be ''harmful'' for them and is ''an antisocial act.'' To him the perfect amount to leave children is ''enough money so that they would feel they could do anything, but not so much that they could do nothing.'' For a college graduate, Buffett reckons ''a few hundred thousand dollars'' sounds about right. "

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by StealthRabbit » Wed Sep 11, 2019 8:59 am

Lots of good answers and few, if any confirm a NW figure.
Finances is very situation / values dependent.

I align with NOW / when there is a need, as there will NEVER be 'enough'. (NW)

We set up our DAF for perpetual gifting in our 30's, gave nearly all our 'wealth' / appreciated assets (Stock / properties) to a fund that our heirs will manage in perpetuity (should they so desire).

We always purposed to give more away than we spent on ourselves, often to needy neighbors, seldom to family. Our NW is of no material value to us, $$ is just a 'temporary tool'.

It all worked out OK and many people are in better shape because of it (including our kids who were 100% self supporting pre-age 18. ... 15+ yrs following their 'self funded' college they are very community / 'others' focused in time and money and talents. I would trust any of them with 100% of our estate (as I had to do with my disabled parent the day I turned age 18) I inherited a LOT of family debt (while making $1.50 / hr).

Family will survive and likely thrive in spite of 'gifting', so consider all options for wealth distribution. NOW and in the future. My predecessors 'Didn't have a nickel to rub together", we have an abundance and are happy to share it.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by michaeljc70 » Wed Sep 11, 2019 9:05 am

elcadarj wrote:
Wed Sep 11, 2019 8:53 am
WWWBD?

Lot's of Buffett fans here so here's a quote from this article in Forbes, doesn't help with the NW question but gives a idea as to, "should I give and how much?": https://archive.fortune.com/magazines/f ... /index.htm ETA: The article also discusses when.

"Buffett is not cutting his children out of his fortune because they are wastrels or wantons or refuse to go into the family business -- the traditional reasons rich parents withhold money. Says he: ''My kids are going , to carve out their own place in this world, and they know I'm for them whatever they want to do.'' But he believes that setting up his heirs with ''a lifetime supply of food stamps just because they came out of the right womb'' can be ''harmful'' for them and is ''an antisocial act.'' To him the perfect amount to leave children is ''enough money so that they would feel they could do anything, but not so much that they could do nothing.'' For a college graduate, Buffett reckons ''a few hundred thousand dollars'' sounds about right. "
If my parents were billionaires and left me a few hundred thousand, I would definitely feel slighted (unless they had given $$$ at other times). The thing is, most parents when they have enough/retire and start gifting they are older. Their kids are older. By the time my parents started gifting I was almost 50 years old. My career was well established (and almost over) so there was no need for them to really worry about slacking off for most of my life. Not to mention that the max gift (without filing a return) is $15k if single or $30k for a couple giving which isn't enough for most people to live off of without other income. Of course, if the receiver is a couple that can be doubled.

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Re: When do you start gifting the max to your family members? When is enough NW totally enough?

Post by AlohaJoe » Wed Sep 11, 2019 9:18 am

elcadarj wrote:
Wed Sep 11, 2019 8:53 am
For a college graduate, Buffett reckons ''a few hundred thousand dollars'' sounds about right. "
FWIW, "a few hundred thousand dollars" for a college graduate means maxing out the annual gift exclusion every year for a decade, which is probably far more giving than most Bogleheads think is appropriate for a recently graduated 20 year old.

In any case, I don't see that Warren Buffett has any special expertise in raising children, so I'm not sure his advice carries much weight.

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