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I want to give $15k each to my daughter, her husband, and their two children for a total of $60k/yr. I see this example all over the internet, but no details on what this actually looks like. Since my two grandchildren are both minors, how do I give them the money in the most flexible way possible? My current thinking is that I should ask my daughter to open a joint checking account with all 4 of them on it, but would they be able to spend the money on anything? For example, could they use that $60k to pay off the mortgage, or would they need to only use $30k to pay off the mortgage since it is in my daughter and her husband's name? What about regular expenses like groceries, etc?

Edit: I am not trying to prevent my daughter from spending it any way she likes. I want her to have the most flexibility, but stay within annual exemption (otherwise I'd just give the $60k directly to her). I actually want them to spend it as a family on anything they want/need, not be worried about the legality of keeping $30k in the grandchildrens' names.

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  • Are you trying to prevent your daughter and SIL from spending your grandchildren's money?
    – RonJohn
    Nov 9, 2019 at 20:12
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    I’ve tagged this United-states based on the $ in the question and the reference to checking accounts, but if this is wrong please comment or edit to indicate where you are.
    – Vicky
    Nov 9, 2019 at 22:51
  • Also, other commenters seem to assume you are seeking to prevent your daughter from spending the money you gave to your grandchildren, but I interpreted your question the other way round - you want your daughter to be able to eg put all the money towards the mortgage, even though some of the money was technically given to the grandchildren. It would also be good if you could clarify your intentions / requirements.
    – Vicky
    Nov 9, 2019 at 22:54
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    I recommend against giving the full $15K by check(s) as gifts; cut it back to, say, $14K. Technically, the annual per-person gift tax exemption applies to the sum total of gifts given in all of each year, including gifts for birthdays, Christmas etc., and the reduction ensures that you need be concerned about violating the limit (unless you are uncommonly generous and give lavish presents on such occasions.) Not that the IRS is going to notice if you give more than $15K total since the only paper trail is likely to be the $15K check.... Nov 10, 2019 at 17:40
  • Forgetting about potential gift taxes for a moment, what is the approximate total you wish to give them in your lifetime? (I'm guessing the $60K was chosen simply because you know you wouldn't have to fill out any forms.) But would you prefer to give $100K per year for the next 50 years, or maybe $10M per year for the next 50 years, etc?
    – TTT
    Nov 12, 2019 at 21:32

3 Answers 3

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You can write a separate check to each of them. Your daughter can deposit the kids' checks into her account if they are minors. Alternatively she can open kids savings accounts for each of them, she'd have full access to the money but it also gets them an account of their own. Of course if it's their account they may have some questions about the large deposits/withdrawals and why she is taking "their" money.

If they are not minors or there's a desire to avoid any awkwardness about them getting a large gift and being expected to turn around and re-gift it to her (to the IRS a gift can't have strings attached like that), then it's probably better for you to just gift your daughter $45k and her husband $15k, you'll have to report the gift on your tax return, and count the $30k towards your lifetime gift tax exemption. No gift tax due unless you've exceeded the lifetime exemption.

You probably already know this, but since it is a per person annual limit, if you are married you and your spouse can each give $15k to your daughter and her spouse, so $60k without involving the kids at all.

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The $15K limit is per year, so Keep It Simple and -- since it's November -- give your daughter and SIL each $15K now and another $15K in eight weeks.

Voila'... you've given them $60K without having to worry about grandchildren, confusion, laws, etc, etc.

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  • Thanks for the advice, but I want to do this annually, so that doesn't solve the problem.
    – glgd
    Nov 10, 2019 at 5:04
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    @glgd remember that giving your daughter $60K does not induce a gift tax. You just have to file a form with the IRS, and it reduces your $11.2M estate by $45K. So (presuming you're married) unless your estate is $22.4M, there's no real worry except for a bit of paper to keep track of.
    – RonJohn
    Nov 10, 2019 at 5:20
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If your grandchildren go to private school, you may be able to give more than $15k by using a 529 account. The funds would be restricted to education expenses, but this would relax their budget for other spending.

The above is not tax advice.

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