We are not setting up substantial trust funds. Heck, we are not even fully taking advantage of the tax code that says I could give each kid $14,000 a year, and Alison could, too, so that we could end up gifting each of our four children $28,000 a year with no tax consequences to either us or them.
We are not even averaging half of that. But for the last four years, right around the holidays, we have given them checks — along with traditional presents. So far the total allotted in aggregate to the four of them adds up to about three years of higher education at a good private college.
They have each parked the money in low-cost, diversified index funds.
Why would we ever give them our money? A couple of friends asked this question in horror — figuring we could use the funds, or it would be better to wait until after my wife and I die.
My answer is threefold.
THEY CAN USE THE MONEY NOW. Our oldest child, who recently bought a house in suburban San Francisco, paid more for his home than I did for any of mine. And the mortgage that he and his wife have on their charming (read: small) house could choke a horse, as my mother used to say. Oh, and by the way: They are saving so that the world’s cutest and smartest grandchild — now 23 months old — can go to college. Grandchild No. 2 is scheduled to arrive in October.
Child No. 2 and his wife are house hunting. Child No. 3 and her fiancé soon will be. And Child No. 4, the aforementioned rather tall baby, is planning on starting a restaurant. They have legitimate uses for the money — now.
THEY ARE GOING TO GET THE MONEY ANYWAY, IN THE FORM OF AN INHERITANCE. But hopefully that won’t be for a while — and as you saw in Point 1, if they had the money today, their lives would be easier.
AND FINALLY: Why, as a parent, would you want your children — even if it is on some tiny, tiny, tiny subconscious level — waiting around for you to die, so they can inherit money they could use now?
Our friends listen to all this, and sometimes they have questions like, “Aren’t you concerned you are giving them money you may need someday?”
Not really. While neither Ali nor I own a working crystal ball, we have prepared the best we can for the future. We have saved — and continue to save — aggressively for retirement, and we have really good health insurance.
The other common question is whether we’re worried about what our kids might do with the money.