Over the years, many of my clients have discussed giving gifts to their grandchildren and how to set appropriate boundaries. Sometimes when grandparents provide money for college tuition or other support for their grandchildren, they can find themselves in difficult situations when their gifts are taken for granted or abused. A recent article in The Wall Street Journal (“Grandparents, Set Boundaries on Gifts”) provides some help advice to grandparents contemplating giving such gifts. Here are a few recommendations:
- Have a Plan. Before making a gift, it is important to have a plan in place. Considerations such as how much can you afford to give, for what purpose the gift is intended, will future grandchildren receive a similar gift, etc., are all important considerations that should be carefully thought out before any gifts are made.
- Consider Your Motives. To help avoid undermining a child’s parents with gifts to their children, discuss the matter with your son or daughter regarding what you would like to give and why. Also, seek their input and approval before making any gifts.
- Share Your Story. Don’t miss out on the opportunity to share with your grandchildren why you are giving them money. This can help create a positive legacy that can last long after you have passed away.
- Know the Implications of Your Gift. Beware of the potential tax implications of any gifts. Also, it is important to know how your gift may impact the grandchild’s eligibility for need based college financial aid.