Ethical question re: gift of stock to pay down debt?

[parsley]

My DH's grandmother just gave DH and DD a gift of stock that she transferred from her account.  I don't actually know the company yet, this was a surprise gift and it didn't go directly to me so I don't have any paperwork.   It's not a huge amount but it's not a tiny amount either.

DH and I are considering selling the stock to make a lump payment to the principal of one of our huge student loans.  The reasons in favor of this decision are 1) paying off debt allows us to better support ourselves and our kids in the long run; 2) we aren't sure if we support this company's business or business practices; 3) we're expecting a new baby in February and we're concerned about things getting more expensive; 4) we're concerned about DD1 having these gifts that won't be matched for DD2 and that we won't be in a position to match (the previous gift was cash which we put into a money market and just plan to split between the kids as they get older). 

On the other hand, the gift to DD was to DD.  Is it irresponsible for her parents to make financial plans with her money?

I'd love to hear your thoughts!

[SunRise]

I don't know about the ethics of it, but I would keep DD's stock for her / college ...unless there was a huge emergency such as job loss and no money ... last resort.

As far as the stock for your DH, that would be up to you two to decide.

[Ramzubo]

Normally I'm a fan of selling stocks to pay off debt. When dh's grandparents gave us a small stock we used it to pay for Dh's school back in the day. I'm sure grandad had plans of us keeping the stock since it was from a company near and dear to his heart (but not ours..it was an alcoholic beverage company), but it was better to pay off school than rack up loan debt. As long as he agreed, I would have no problems selling DH's stock to pay down debt.

As for your DD's, I would feel bad using it to pay off my own debts, although I can see your point. It would also make me feel bad for only one kid to get the money. I would probably ask (or maybe do it anyways) if I could cash out DD's and split the money into saving for both kids, maybe buying a small extra gift for DD since it was sent to her. For small amounts I would be ok just letting DD have a "hers only" gift, but for larger amounts I don't think I would be ok with that. I would not be able to tell one kid you get college, a car, or whatever and another sorry you didn't get a gift from so and so.

[sunnysandiegan]

A gift is yours once it is given to you.

From that perspective, the gift of stock is yours (family, not you individually) to do with as you please.

I, however, would want to honor the kindness and thoughtfulness of the gift-giver. Why did she give the gift in stock? Was it because that was what was available to her to give? In which case, I'd be fine with converting to to a more user-friendly medium for my family. Did she give it for a reason? In which case, I'd want to learn more about that reason before deciding. The gift would still be our family's to do with what we please, but I just would want to honor the thoughts behind the action.

As for how your family decides to use the gift, that depends on your values. If you are asking this question, I suspect there is a reason. Honor your feelings.

If grandma is still alive, is it likely she will also give a gift to the new baby? Perhaps grandma intended it to be a gift to be split amongst any/all of DH's children? Personally, I wouldn't worry about the unequal amounts of money given to each child AT THIS POINT in time. You have a lot of time to figure that out later.

For me, the ethical question cannot be answered until it is known what grandma's intentions were with the gifts of stock. That's just me.

As an example, various relatives have given individuals in our family gifts of cash at various points. DH was free to do as he pleased with his; I was free to do as I pleased with mine. It was an open discussion and dollar amount DID matter. I asked each gift-giver about the cash gifts for DD. One person wanted the CASH to be there for DD later on, so we opened a savings account for DD. Other folks just didn't know what to send, so DH & I decided each time what to do with the cash gift. The result was different each time. As her parents, we are responsible for caring for her and making these decisions. For us, it was okay to use cash gifts for DD for non-gift type things that would benefit her directly, such as swim lessons or cloth diapers. When we were both unemployed one Christmas (DD was 9 months old), cash gifts were okay to use for essentials for her (for us). As DD has grown (she's 10 now), we've given her more and more of a say in how she handles these things...preparing her for adulthood gently.

I cannot say for sure, simply because I haven't been in the position you are in, but I'm fairly confident I would not choose to sell a stock gift given to my DD and use it to pay my own student loan. The reason of better quality of life for the family doesn't work for me. However, I don't know the quality of life we're discussing. Is there a degree in hand and the potential to earn an income? If so, then I would keep the gift for DD (dealing with potential siblings later) and let quality of life sort itself out with the income potential from the degree earned with the student loan money. If no degree was earned and/or the potential income earnings was otherwise restricted for some reason, then I might act differently.

[Imakcerka]

I honestly would just put hers aside and forget about it for now.  There is nothing saying you can't sell it and split it later, as in amongst the kids.  After my parents divorced my father used my college fund that he had access to to pay off his debts.  Nice for him right?  I knew about the college fund because I had heard about it in conversation.  And I was little at the time.  When it came time for me to go to college... NO MONEY!  There had been money and apparently enough to get me through 4 years.  My mom thought it was there to and when we found out it wasn't holy crap change of plans.  I joined the military instead.  My brothers was gone too.  The gift giver eventually figured out what had happened and since then nobody has gotten a dime in the family for college.  He doesn't trust the adults.  He had his will redone and it's going to a scholarship program... I don't blame him at this point. 

[parsley]

It's really interesting to hear the different ideas!  Thanks everyone for sharing your perspective.  We still haven't made up our minds... but here's a little more info about our situation. 

DH's grandmother is essentially liquidating her estate.  She may do another round of gift giving but her will states that the remainder of the estate goes to her children (not her grandchildren or great-grandchildren).  So, there's a chance that there will be a gift for DD2 but it's also likely to remain unequal with a gift to all grandchildren and great-grandchildren at the same time with DD2 added into the list of gift receivers.    

For further sense of perspective, DH's parents have money that they will pass along to us/DD on their own time-frame.  My family doesn't have any money-- I'm just grateful I won't inherit their debts. 

The idea that DH and I had about selling both sets of stock and using it toward student loans is that we would make up the difference to DD1 and DD2 in the long run and in the short term it would allow a little more breathing room during a time that DH's income will be reduced as he works freelance and will work fewer hours when the baby arrives and for the following 18 months (I'll have paid maternity leave for 4 months).  So, we could work on paying off loans now and then be in a position to re-gift the funds split between our total number of kids in the long run.  We figure when the youngest is in full time daycare, DH will get a full-time job that will increase his income by $30,000. 

Logistically, we also find it a little unappealing to have a separate stock account that we have to keep track of. 

[Ellien C]

Originally Posted by parsley 

The idea that DH and I had about selling both sets of stock and using it toward student loans is that we would make up the difference to DD1 and DD2 in the long run and in the short term it would allow a little more breathing room during a time that DH's income will be reduced as he works freelance and will work fewer hours when the baby arrives and for the following 18 months (I'll have paid maternity leave for 4 months).  So, we could work on paying off loans now and then be in a position to re-gift the funds split between our total number of kids in the long run.  We figure when the youngest is in full time daycare, DH will get a full-time job that will increase his income by $30,000. 

Logistically, we also find it a little unappealing to have a separate stock account that we have to keep track of. 

 A LOT of people who borrow money have the intention of "paying it back later" when times are better. And for a LOT of peole that never happens because something comes up. The question to ask yourself is "What makes you different?" (I bet the poster who's Dad spent the college funds figured he'd pay it back later when times were good.).

When you talk about a separate stock account to keep track of - what do you mean? I had lots of stock certficates gifted to me as a baby and the statements just came to whatever address I gave them. There wasn't anything to really keep track of. What are you thinking of?

I'll also say that as the youngest, my parents saved some stock gifts that were given to them (and each of the kids) and gave me THEIR certificates. That's kind of how they made up the difference for the last grand child.

[parsley]

Originally Posted by Ellien C 

When you talk about a separate stock account to keep track of - what do you mean? I had lots of stock certficates gifted to me as a baby and the statements just came to whatever address I gave them. There wasn't anything to really keep track of. What are you thinking of?

I'll also say that as the youngest, my parents saved some stock gifts that were given to them (and each of the kids) and gave me THEIR certificates. That's kind of how they made up the difference for the last grand child.

Very interesting.. I'll have to look into whether or not we have to maintain anything.  I have never had stock (aside from my retirement fund that I'm agressively contributing to) so I guess I was imagining it was yet another bank account to deal with...  DH had to open a brokerage account to receive these gifts though so I was assuming that we'd have to watch for fees and keep track of that account ourselves just as we do with our statements from our retirement accounts, savings, and debts.  I guess this is also part of why I'm inclined to sell it all one way or another.  I have no familiarity of interest with stock-- I prefer savings accounts, Certificates of Deposit, savings bonds, hiding cash under the mattress :)

[SunRise]

Originally Posted by Ellien C 

 A LOT of people who borrow money have the intention of "paying it back later" when times are better. And for a LOT of peole that never happens because something comes up. The question to ask yourself is "What makes you different?" (I bet the poster who's Dad spent the college funds figured he'd pay it back later when times were good.).

When you talk about a separate stock account to keep track of - what do you mean? I had lots of stock certficates gifted to me as a baby and the statements just came to whatever address I gave them. There wasn't anything to really keep track of. What are you thinking of?

I'll also say that as the youngest, my parents saved some stock gifts that were given to them (and each of the kids) and gave me THEIR certificates. That's kind of how they made up the difference for the last grand child.

That is a great idea for the OP.

I agree with the intention of "paying it back" doesn't always happen.

I think with regular debt, such as student loans, you just need to keep working away at it. A lot of life is like that. No quick solutions.