Ah…when we gifted our kid, it came out of a regular account…not from selling off stocks or anything else. Thus…no tax impact on anyone.
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As an aside - depending on the child’s income level, gifting the stock itself to your kids can be an effective tool. They don’t get the step-up in basis (you have to die for that), but if their income is low enough, they might pay nothing when they sell it. I do realize this is unlikely for someone working in Silicon Valley as the example mentions above. I’m just throwing this possibility out.
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Yes, I am gifting my grad school kid each year in highly appreciated stock which she then sells to fund her Roth IRA.
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We recently made a large gift to help D buy her house. Had to take a hard look at selling the holdings with the least amount of capital gains. We feel good about staying under the Medicare IRMAA threshold for 2024.
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I had never heard of the Medicare IRMAA threshold. I just went over it by $3k!
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Bummer! H had to deal with IRMAA when he retired and started Medicare a few years ago (they look back two years). He was able to get it reversed, but it took a lot of back-and-forth.
So it was on our radar when we sold stocks for D’s house. Luckily (or not) we had enough under-performers to keep the capital gains from bumping us over.
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I started Medicare while my DH was still working and paid IRMMA for four years, but it was just me. Then one year with both of us. Yikes. Then our total income settled down and IRMMA went away.
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My cousin works in SV, and his mom owned a house there. He inherited it at it’s present value, which was WAAAAYYYYY more than she paid for it, and saved lots in taxes she would have had to pay if she sold it to buy another. unfortunately she died young (68ish), and of course he would rather have his mom (and dad) alive, but at least it worked out well economically.
I would try to be “equal” but also support the grad student kid more. My youngest is 8 years younger than the oldest. In that time, college costs went up signficantly. They had the same general cost limitations, but the amounts were not the same. I am sure we spent more on the youngest, just because things cost more at that time. I also think there is a “need” component in gifting “found money”, but that can be very difficult to balance without having one child feel slighted.
I agree with the “gifting” your two bio kids the same amount, but also using some of the windfall to help the grad student with loans. I would probably tell the non-student I was going to do that and hope it was not met with resistance. If the windfall is a much more substantial amount than you note (that is $60K rather than $6K), the non-student child may feel more slighted if grad school kid is given an extra $20K rather than $2k.
Similarly, would you give each couple the same amount for a wedding if one kid goes to City Hall and only the immediate family has lunch, versus a celebration where you get to invite extended family and friends? Obviously, the second will cost a lot more but also be more inclusive. Does that have to be even? Or is it a choice to not have a big wedding and so that money does not need to be spent?
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What we are doing is just gifting the same amount to each kid when they get married. They can choose to go to City Hall and bank the gift, or they can use the money for a large fancy wedding.
We don’t count “pennies” on some gifts, and are probably more generous with the kid in grad school for things like travel, clothes, streaming subscriptions. However, the annual cash gift is equal as well as what they will eventually inherit.
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Sounds like decisions on what to pay for college costs. Should the amount given be equal, or are you just promising to pay for your kids’ education/wedding?
Seems to me that more people might say that unequal college contributions are justifiable than would say that unequal wedding contributions are justifiable. Perhaps that’s because the former is somewhat less under your control than the latter? Or because your kids are more like kids when they choose a college than when they choose a wedding venue?
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That’s an interesting observation. I think the main difference for me is that when getting married the kids are older and more in control of costs and the decision-making. Ds2 knows what we gave ds1 for his wedding, and it’s up to ds2 and his partner to decide how to spend it. Could pay for a small affair and lunch out for a wedding party or he could blow it all on a top-of-the-line photog, you know? His choice.
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I know that this is a bit off topic. I feel like it’s been discussed before. I don’t feel like starting another thread or figuring out where it was discussed before.
I am a HUGE proponent of gifting money and letting the recipient figure out how to spend it.
Maybe it’s because I experienced this recently. But give the money for the wedding instead of saying you are paying for the wedding. So that the couple can decide what kind of ceremony and wedding they want. And not what you want. Or to make any type of ultimatums on how the money is spent.
It may not be what you were thinking or wanted. But it’s what your child and their future spouse decided they wanted.
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When S got engaged, we gave them a big check (5 figures) and told him that they could spend it as they chose. Again for his wedding, we gave them another, smaller 5 figure check. We have been fully funding D all her life and will continue to do so until she someday MAY be able to earn some income.
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But is it easier with two sons to just give a set amount of cash? Maybe it’s also easier to do that when kids are older and pay some of the costs themselves.
The costs incurred by my brother were very different when his daughter got married than when his son got married. The kids were young and had no money of their own, and in both cases the bride’s family bore the lion’s share of expenses (and selected the venue, decided on drinks and caterers, etc.).
I imagine it’s def easier to give money for a wedding to sons and let them figure it out rather than being involved in the details as seems more traditional for parents of daughters.
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As the mom of one daughter, I felt very comfortable giving her and fiance a large lump sum. The wedding itself exceeded all my expectations!
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Along the way, we also paid for the deposit for the venue, alcohol and also the rehearsal lunch. We were happy to contribute and the couple were grateful.
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So mechanically we are giving our daughter $X in credit. She, fiance, DW and FMIL are doing the planning. On an on-going basis, we are paying directly but with a resulting decrease in the X credit. Anything left over from the X credit we will gift in cash (or stock).
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I gave all 3 the same amount for their weddings. We did a lump sum. It was less stressful for me that way.
We paid for all three to go to college. The amount probably was probably not totally equal for a variety of reasons including that S2 got more financial aid because we had two in college the whole time he was in college.
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