Giving Money To Family: Helping Adult Children With a Meaningful Holiday Gift
Many parents want to give money to their adult children, but cash gifts can have emotional, relational, and financial implications.
What are some smart ways to give meaningful gifts to your children this Christmas season?
5 Creative Ways to Give Money to Family
Make their car or mortgage payment for January. If you are intimately involved with your children's finances, you may be able to make the payment directly to the creditor. Otherwise, you can write a check to your child in the amount of their monthly payment and attach a note saying what it's for.
Consider on a holiday getaway. Family vacations create treasured memories. You can take the whole family for a weekend away, or you can make it possible for your kids to vacation without the grands in tow. If your adult child has recently married or is coming up on a milestone anniversary, you may want to reserve a room at one of their favorite spots. Airbnb maintains several luxury rentals around the world. While you can't book a reservation for someone else, you can give a gift card.
Pay for a home renovation project. Is your child saving for a kitchen remodel or a refurbished deck? You could kick in the difference.
Cover the educational expenses of a single college course. Most courses cost about $1,300 at public institutions and $3,200 at private schools. Paying your child's tuition does not count toward your gift tax exemption ceiling.
Create a trust fund, or set funds aside for later. A trust fund is a legal relationship among three parties — the grantor, the trustee, and the beneficiary. As the grantor, you can establish the trust document, which states who can receive benefits, when they can receive them, and in some cases, you might decide to designate for what purposes. You also name your beneficiaries and the trustee. Setting up a trust fund generally requires assistance from an attorney who specializes in estate planning.
Claiming Gifts to Adult Children on Your Taxes
Are Gift Deductions Allowable on Your Taxes?
Generally, no, you cannot deduct monetary Christmas gifts to your children from your taxes. The charitable gift deduction only applies to contributions made to registered nonprofit organizations such as schools, churches, museums, and ministries.
What Are the Tax Implications of Monetary Gifts to Children?
In general, the IRS takes a dim view of bestowing large amounts of money on your adult children because some taxpayers have tried to use gifts as loopholes to avoid paying taxes. In 2021, however, parents can give up to $15,000 per child without filing a gift tax return. If you plan to give your child more than that amount, you must file the return. TheIn most cases, there won’t be any tax due, but the gift will count against your lifetime exemption of $11.7 million. For more information, review the IRS' Frequently Asked Questions on Gift Taxes or talk with your wealth manager or tax professional.
A Biblical Perspective on Giving Money to Family
What does the Bible say about giving money to family?
Throughout scripture, God blesses generosity, contentment, and hard work. When deciding when and what to give to our families, we want to keep those three principles in mind.
First, let's look at generosity. The Bible strongly encourages us to care for members of our family especially older people, children, and those who may be in need.
I Timothy 5:8 says, "Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever."
Occasionally, a family member might use this verse to try to guilt people into giving them money. Read in context, however, that scripture is telling us to support the members of our families who need help ourselves rather than expecting the church to step in first.
Second, consider contentment.
Hebrews 13:5 says, "Keep your life free from love of money, and be content with what you have."
Will your holiday gift to your adult child encourage contentment or spark discontentment?
Finally, keep in mind the importance of hard work. The biblical writers instruct God's people to work hard to support themselves and give to others. Borrowing is discouraged.
Proverbs 22:26 says, "Do not be one who shakes hands in pledge or puts up security for debts."
A gift to your child may be prudent, but co-signing a loan is almost always unwise.
Holiday gifts can help adult children pay bills, gain an education, or enjoy their lives a little more. If you're ready to consider long-term estate planning or a major transfer of wealth, talk to a Christian financial advisor to find ways to let your action benefits everyone involved.