\n Spending the holidays with your adult children and the grandkids?\n <\/p>\n
\n If so, their futures may be on your mind, especially if you sense \u2013 or they just flat-out say \u2013 they\u2019re not flush enough to buy a home, put their own kids through school, or pay off big debts they\u2019ve acquired.\n <\/p>\n
\n As a parent, you may wonder if you should help them or if it makes more sense to stay out of it and leave them money after you die, if that\u2019s an option.\n <\/p>\n
\n To figure out what is right for you, here are four questions to consider:\n <\/p>\n
\n Think carefully about how much you can comfortably offer.\n <\/p>\n
\n \u201cIt\u2019s understandable to want to support your children. (But) balance that emotion with whether you can afford it,\u201d said Rob Williams, head of Financial Planning and Wealth Management Research at the Schwab Center for Financial Research.\n <\/p>\n
\n Consider your cash inflow and your spend rate along with how much of a cushion you\u2019ll need to handle unexpected medical expenses or long-term care, said Dawn Jinsky, a certified financial planner and a partner at Plante Moran.\n <\/p>\n
\n If money is tight, Jinsky noted, it\u2019s okay to say, \u201cWe really want to but can\u2019t right now.\u201d\n <\/p>\n
\n Or maybe you feel you can afford to give money now, just not on a regular basis. So set expectations. \u201cFrame it as a one-time gift,\u201d Jinsky said.\n <\/p>\n
\n Your children\u2019s financial circumstances won\u2019t be identical and you may be considering helping the one who currently has the greatest need.\n <\/p>\n
\n But if your goal is to be fair to your other kids, too, you can do that in ways that don\u2019t require you to part with more money now.\n <\/p>\n
\n Say you have three kids and plan to give one $50,000 today. You might amend your estate documents to make sure the other two children each get $50,000 more after you\u2019re gone, Jinsky suggested.\n <\/p>\n
\n But you might want to explain that to all three kids. \u201cCommunication is key when it comes to family dynamics,\u201d she said.\n <\/p>\n
\n Assuming you will have what you need to live comfortably, there are three potentially good reasons to give your offspring money while you\u2019re alive.\n <\/p>\n
\n First, they may benefit more from financial help in their earlier adult years than, say, in their 60s, assuming you die decades from now. \u201cYour dollars may have more of an impact when given during your lifetime rather than upon your passing,\u201d Jinsky said.\n <\/p>\n
\n Second, it gives you an opportunity to support them in ways that are meaningful to you.\n <\/p>\n
\n \u201cAnchor a gift in your values. Your money speaks for you. Make sure it says what you mean,\u201d said Williams. When his own father became ill, he wanted to give money to his grandchildren and wanted it used for education, so he set up 529 plans for them. But he also wrote each child a personal note, expressing how proud he was of them and how important education had been in his life. \u201cIt was the happiest I\u2019ve seen him. He died three months later,\u201d Williams said.\n <\/p>\n
\n Third, if your estate is large and likely subject to tax after death in your state, if not at the federal level (where individuals can exempt<\/a> up to $13.99 million this year and $15 million next year) giving gifts can reduce your taxable estate.\n <\/p>\n \n If you have an adult child who regularly overspends, mismanages loans or has an addiction<\/a>, think hard before helping.\n <\/p>\n \n You might \ufeffnot want to bail them out if doing so would just reinforce their bad habits. \u201cIn an ideal world, you\u2019re supporting assets and not repairing liabilities,\u201d Williams said. \u201cGenerosity ideally doesn\u2019t create dependency.\u201d\n <\/p>\n \n But you might want to help if part of your child\u2019s predicament isn\u2019t necessarily their fault \u2013 for instance, they\u2019re saddled with unexpected medical debt<\/a> or have a disability.\n <\/p>\n \n If you do decide to help but worry the money won\u2019t be handled well, you can pay a given expense directly.\n <\/p>\n \n \u201cLook for as many avenues that you can to benefit the child but not put financial means into their hands,\u201d Jinsky said.\n <\/p>\n \n Make an annual gift: In any given year you may give up to a certain amount \u2013 it\u2019s $19,000 this year and next \u2013 to as many individuals as you choose. That amount doubles to $38,000 if you\u2019re making the gift with your spouse.\n <\/p>\n \n The money is tax-free to the recipient. And so long as the amount you give to any one person doesn\u2019t exceed the $19,000 cap, it won\u2019t count against your federal lifetime gift tax exemption<\/a> \u2013 which is as high as the estate tax exemption.\n <\/p>\n \n If your gift does exceed the cap, but you\u2019re nowhere near maxing out your lifetime exemption amount, you won\u2019t owe tax on the excess but you will have to file a gift tax return<\/a>.\n <\/p>\n \n Note that once you give the money you cannot control how it will be used. \u201cThe most difficult part for parents in gifting that amount is a little bit of \u2018Let go and let God,\u2019\u201d Jinsky said.\n <\/p>\n \n Pay expenses directly: The bills you pay for your child\u2019s or grandchild\u2019s medical or educational expenses does not count as a gift. \u201cParents can make payments of any amounts directly to the institution if it is for education or medical expenses,\u201d Jinsky said.\n <\/p>\n \n But any other money you use to pay their expenses \u2013 eg, your child\u2019s mortgage or credit card debt \u2013 will count as a gift and is subject to the now-$19,000 annual exclusion.\n <\/p>\n