Giving money to children - what would you do? - Mothering Forums

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#1 of 32 Old 03-02-2008, 06:00 PM - Thread Starter
 
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A scenario:

A Father and Mother have three adult married children. All have kids. All of the married couples are doing ok financially. There are some struggles, but no one is falling behind on bills or spending frivolously.

This Father and Mother have done very well financially. They are multi-millionaires. They occasionally help out the children in small financial ways, but never overdo it. They don't want to "spoil" their kids.

However... for some of the children, having a large financial boost could really make their quality of life better. Better schools for the grandkids, not having to work so many hours, being able to take a vacation now and then, that sort of thing. Not talking about crazy spending on luxury items, more of an improvement of quality of life, KWIM?

If you were the Father and Mother, would you continue on the very limited financial support to not spoil your kids/grandkids, or would you think about giving a larger gift that could substantially improve the quality of life of your children? Or, would you just figure that they will get their inheritance after you pass away? Or, some other option?
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#2 of 32 Old 03-02-2008, 06:24 PM
 
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Hmmm... that's a very personal decision. I can tell you what older, well-off family members have done for us:

Great-grandparents started a college fund for each great-grandchild, a Coverdell one, so it could be used for private K-12 if desired by the family, or saved for college.

Grandparents send a generous but not outrageous check every year that each family uses for something different, some for travel to visit family, some for schooling, some for luxuries.

Parents offered an amount of money toward a downpayment on a home purchase to each child (some married and some not). The same amount of money was given to each child for the downpayment.

I think all three are reasonable ways of helping out adult children and grandchildren without "spoiling." One smart thing that the great-grandmother did is to set aside money in her will for the younger grandchildren who do not yet have children. Basically, she said "if I die before you have kids, I've allotted money in my will to you and I'd like you to spend it to start a college fund for your children."

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#3 of 32 Old 03-02-2008, 06:28 PM
 
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I would want to see my kids and grandkids enjoying the money now instead of not seeing the enjoyment after I'm gone. I would probably plan a whole family vacation every other year. That would be so awesome to take the whole family somewhere they couldn't afford on their own. I would also give "surprise" chunks of $$$$!

It sounds like in your scenario that the children are very responsible...working, paying their bills, raising their families. I would see nothing wrong with sharing the wealth. I would do it!!!!

I hope and pray that some day I will be able to financially bless my children and grandchildren.

Mjoy
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#4 of 32 Old 03-02-2008, 06:56 PM
 
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In that senario, I would give as much as I could to each person each year without incurring gift taxes (Is it still $11,000 per year? I'm not sure.) so I would reduce my estate. I'd rather give the money to my family (or give to trusts for younger relatives) than let the government take my money in estate taxes.

But I can also imagine different perspectives on the same senario where a parent might not choose to give away their money and that is okay too.

Tanya
Mom to John (age 11), James (age 9) & Katherine (age 5)
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#5 of 32 Old 03-02-2008, 07:17 PM
 
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I think I would give while I can still seem them enjoying it. Or perhaps simply take the burden of buy paying for their schooling or something.
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#6 of 32 Old 03-02-2008, 07:18 PM
 
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Well, hypothetically, I would give, but not an annual allowance or any such thing. I mean, I wouldn't want them to expect a stipend or something. But an occasional generous gift would be appropriate...a downpayment for a house, or maybe a vehicle or vacation.

That said, I do here grumblings among my contemporaries about how much money their parents or grandparents have and how they feel entitled to receive more help from them. I really don't like the attitude of entitlement and don't feel that adult children are entitled to their parents' fortunes.

4 kids under 10
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#7 of 32 Old 03-02-2008, 08:32 PM
 
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What an interesting topic!

I totally agree with sanguine - I hope to be in a position to give my adult children one time gifts like a down payment for a house, or a car as a college graduation gift or a trip for a wedding present.

As I have been drinking the Dave Ramsey kool aid, I agree with his philosophy on not giving adult children money for an allowance or bail out because of poor planning, spending practices or a sense of entitlement. The tougher it is in the land of stupid, the shorter the stay will be. If they want to take their family to Hawaii every year, get a better job and earn it.

I had an uncle that had a stroke at age 40 and my grandparents did a lot to help his family in the last years of his life like paying their bills. That type of thing is a parent's responsibility if they are able to do it. They gave my dad a car to kind of equal things out (because they wanted to). That seemed ok to me.

However, I'd do college funds for the grandkids and give them lots of expensive gifts. In order to enjoy my money with them, I like the idea of giving family gifts like taking everyone to Disneyworld. I'd like taking a grandkid on a trip with me to Europe.

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#8 of 32 Old 03-02-2008, 10:04 PM
 
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We've been on the receiving end of many gifts from relatives that are in a more fortunate place than us currently. It's the reason that dh was able to go back to school. Hopefully, I will someday be in a similar position to help out my kids.
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#9 of 32 Old 03-03-2008, 01:03 AM
 
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Fun question - can't say my family grapples with it at all. lol

I think that if I were a grandparent with $$, I'd be willing to pay for a private education for all the grandkids. Just make that a flat out gift up to high school graduation, then maybe tell the grandkids that I'd match any scholarship funds they earn for college.

and for the kids, I think that I'd give good Christmas/birthday gifts but keep the price tag or cash equal so favoritism can't be charged.

For me, I'd prefer the kids/grandkids to wish me a long and healthy life rather than having them hope that I die soon. Unless they are brats, than everything changes!
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#10 of 32 Old 03-03-2008, 09:59 AM
 
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I agree with one time gifts but not regular life support. No way! My kids make their own lives and it's not my job to support them. I refuse to subsidize their lifestyle. I made my money and they should make theirs.

DS (6.06), DD (10.08), DD (05.11).

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#11 of 32 Old 03-03-2008, 12:00 PM
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I know someone whose parents dole out a large cheque each year too. The guy I know uses it for big purchases or savings. His sis counts on it and uses it for income. She whines about it not being enough etc. She has entitlement issues big time. Its weird b/c the brother doesn't at all, he's grateful for the money but if its not there, oh well. I'd be likely to do a college fund or pay for nice extras, possibly some money for each for a down payment but not a regular cheque.
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#12 of 32 Old 03-03-2008, 12:02 PM
 
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My ideal of family is more like a village, where "everyone does better when everyone does better"--family members gladly caring for each other during infancy and old age. Family members giving to each other with whatever resources are available to them. I don't think you are obligated to fund truly unhealthy choices (heavy drug use, alcoholism), and I think there should be an expecation of equal giving in terms of effort, but my ideal model for family is *far* more inter-dependent than anything valued in society today.


It seems at some point in a past generation we developed this kind of cowboy wild west fantasy for raising children--feed and clothe them, but don't let them grow up thinking of you as part of their long term support team. At 18 everything should change--no more assuming you are there for help. They should go out into the world and make their own way. No hand-outs, no depending on a parent to help. Well, it goes both ways. You can take that approach. But when you are old and need someone to make your meals and clean up after you, all of your money will pay a stranger to care for you in your final years. If the lesson you wanted to teach your adult child was "don't depend on each other", there will be no emotional infrastructure to support your kids caring for you. It will feel awkward, uneasy, burdensome for everyone involved. Even resentful--after all, depending on each other as adults is seen as a weakness. It will feel safer to have a stranger help you. And that is really sad.

It is not like that around the world. It is not like that in every culture. Caring for the elderly is not a loathesome burden, but a deeply fulfilling time honored tradition. I do not want to pay a stranger to care for me while I'm dying. I do not want my own children to feel so cut off from me as adults, that we would feel awkward living together or caring for each other in sickness or old age.

And I think that starts by bringing a sense of community, of inter dependence, of being a team, over the lifetime of a family. I would certainly give what and when I could to help my children as adults. I would like them to be appreciate, but mainly I would like them to give back equally spontaneous, equally willing. I think it's fine to depend on each other in this way. I think it is far healthier than what we value in society right now.

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#13 of 32 Old 03-03-2008, 12:04 PM
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I would give, give, give.

If I felt that perhaps the money would not be used wisely, I might not give straight out cash (if someone had a gambling or drug issue or something) but I would give in the way of things that improved quality of life -- such as paying for education, or paying off a car loan or buying the family passes to entertainment of their choice or something of that nature.

I agree with heartmama
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#14 of 32 Old 03-03-2008, 12:20 PM
 
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I would give money annually to help avoid inheritance taxes. As someone else mentioned, you can gift a certain amount each year.
I would probably do it with the expectation that the bulk of the money went to long-term retirement or college savings. Since its an annual gift, if I saw that people were squandering the money then I would be less inclined to continue the gifts.

This is what my grandfather did for his children. I think it was a good plan.

Mom to Kira March 2009
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#15 of 32 Old 03-03-2008, 01:58 PM
 
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With any luck, DH and I will have that much money by the time we're old. I can't say that I would share it with DD and her hypothetical siblings in the circumstances you describe. Our retirement savings need to pay for *us* in our old age. A couple of million dollars sounds like a lot, but it's really not if someone develops dementia or other serious chronic illness. People live a long time these days.

What my kids will get: paid-for undergraduate educations and *some* money for a down payment for a house. A secure, paid-off home that they can return to as needed. Grandparents who are available to lend a hand in providing child care and other help as needed.

I'm with the PP. The entitlement I hear some people express about their parents' and grandparents' savings, i.e. their "inheritance" alarms me. And it's not a gift if they are guilted or pressured into sharing it.
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#16 of 32 Old 03-03-2008, 02:49 PM
 
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Quote:
Originally Posted by heartmama View Post
My ideal of family is more like a village, where "everyone does better when everyone does better"--family members gladly caring for each other during infancy and old age. Family members giving to each other with whatever resources are available to them. I don't think you are obligated to fund truly unhealthy choices (heavy drug use, alcoholism), and I think there should be an expecation of equal giving in terms of effort, but my ideal model for family is *far* more inter-dependent than anything valued in society today.


It seems at some point in a past generation we developed this kind of cowboy wild west fantasy for raising children--feed and clothe them, but don't let them grow up thinking of you as part of their long term support team. At 18 everything should change--no more assuming you are there for help. They should go out into the world and make their own way. No hand-outs, no depending on a parent to help. Well, it goes both ways. You can take that approach. But when you are old and need someone to make your meals and clean up after you, all of your money will pay a stranger to care for you in your final years. If the lesson you wanted to teach your adult child was "don't depend on each other", there will be no emotional infrastructure to support your kids caring for you. It will feel awkward, uneasy, burdensome for everyone involved. Even resentful--after all, depending on each other as adults is seen as a weakness. It will feel safer to have a stranger help you. And that is really sad.

It is not like that around the world. It is not like that in every culture. Caring for the elderly is not a loathesome burden, but a deeply fulfilling time honored tradition. I do not want to pay a stranger to care for me while I'm dying. I do not want my own children to feel so cut off from me as adults, that we would feel awkward living together or caring for each other in sickness or old age.

And I think that starts by bringing a sense of community, of inter dependence, of being a team, over the lifetime of a family. I would certainly give what and when I could to help my children as adults. I would like them to be appreciate, but mainly I would like them to give back equally spontaneous, equally willing. I think it's fine to depend on each other in this way. I think it is far healthier than what we value in society right now.
Couldn't have said it better myself. I was trying to find a way to say this sort of thing without sounding entitled. If I had taken care of all my needs and potential future needs I would give and share as much as I could. And if anyone in my family was struggling, I would help them out in an instant. I used to dream of winning the lottery simply so that I could pay off the student loans my family and good friends.

I think the idea that the family unit in this country excludes grandparents is very very sad. Do you know that we are the only mammal with a significant life span after we can no longer have kids (women anyway)? As women we live 40-50 years beyond child rearing ability so that we can support our grandchildren and even great grandchildren! It is sad that in this day and age that translates to money. Traditionally, and more helpfully, it would have been time, support, food, etc.

/soapbox

, , , , , to DD1 (4.5 years old) and DD2 (7 months) and 2
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#17 of 32 Old 03-03-2008, 03:13 PM
 
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I think it was in "The Millionaire Next Door" that talked about the danger of over-supporting adult children and not allowing them to be self sufficient. Its been years since I've read it, but coming from a modestly wealthy family I think about it a lot.

My parents supported me financially until I was 18 and gave me the gift of my college education. Its the most wonderful gift I've ever received and I thank them for it all the time. I've still had plenty of opportunity to struggle on my own and I believe I'm all the more responsible for it and not having those 80-100k in loans gave me the ability to purchase my first house at 24.

Adults should be supporting themselves. Big checks or recurring stipends are dangerous. I really don't believe a parent should give a child a down payment for a house. There is a lot of character building that happens when you eat ramen for a year to watch the savings account balance grow. If it's a young family that just doesn't have the income to save, there are other ways to give gifts that take pressure off them - paying for childcare, education, etc. Big family vacations are another way to give & raise their standard of living without creating any dependency issues.

It's great to pay for something they would forgo without the money available, but you shouldn't give money in any way that would allow them to be less responsible with their own income.

XM,: mama to ds (5/08), dd (9/10) and ds (6/12) ! whale.gif :C.H.S & M.

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#18 of 32 Old 03-03-2008, 03:47 PM
 
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Honestly, it would depend on my child, and what they were doing with her life.

I would probably be willing to give "more" money to a child who was working in a low-paying public servant type job. I may get flames for this, but, if my daughter was in, say, education, or, I don't know, was working as a nurse in an impoverished area, I'd be MUCH more likely to help her with further education expenses, down payments on a house, nice vacations, etc.

Unfortunately, you can eat ramen for a year, and if you're only making 18,000-22,000 to start (before taxes!), you're still going to be scraping for years before you have enough for a down payment on a house. Even more if you do a "stipended" volunteer job (I taught middle school on an Indian rez...my starting salary in 2000 was 11,000/yr...it was a whopping 12,020 after three years ).

That sort of stuff is important to me...unfortunately, society doesn't really see fit to reward people monetarily for doing those sort of jobs, so, if my child were responsible, working hard, and serving her community, I'd help her out with money for specific purchases.
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#19 of 32 Old 03-03-2008, 03:53 PM
 
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I think part of what bugs me about the situation that the OP described is that is that it does describe the situation with my ILs, as well as many people their age. Their wealth now comes from saving while they were our age in pretty much the circumstances the OP describes, which are basically our circumunstances, too.
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#20 of 32 Old 03-03-2008, 03:59 PM
 
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I'd rather see them enjoy my money and make it so they don't have to work as much. Then leave the rest in an inheritance.

Amy ~ Web Designing Single Mom to 4: DD14, DS12, DS5, DS3
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#21 of 32 Old 03-03-2008, 04:45 PM
 
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I'd definitely be splurging on family get togethers and vacations... and also helping out with home purchases. Growing up I did see various families experiencing opportunities for financial help in purchasing homes and the ones that refused are now in very desperate situations whereas the ones that accepted were able to go on and purchase other homes, retire early, have loads of cash to live off and even able to more than pay back that financial help. Real estate's just crazy. Even where I live now it seems like the only people that can reasonably afford to purchase a home anymore were able to do so because they had a home elsewhere so had equity... I would especially hate to see my kids throwing out money on mortgage insurance when I could've helped them out a little there. I mean people certainly do manage to do it... like we did on one income struggling, but then we got stuck when an opportunity for better pay in a better town to raise our children came along but because we had all our money tied up in our home and prices in our area had not gone up over inflation we had to pass because we couldn't afford to get out... and this is the kind of situation I've seen so often, it isn't really so much about being wiser financially as a gamble with the whole housing market. I have a friend who frittered away his money on drugs and cars he wrecked and yet he bought a house in the right place at the right time and is now a millionare. So this is more a rant than an answer to the question, haha!

I agree wholeheartedly with heartmama, though.
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#22 of 32 Old 03-03-2008, 04:51 PM
 
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Quote:
Originally Posted by Herausgeber View Post
W

What my kids will get: paid-for undergraduate educations and *some* money for a down payment for a house. A secure, paid-off home that they can return to as needed. Grandparents who are available to lend a hand in providing child care and other help as needed.
Oh Wow, will you be my mom?

That is awesome that you are going to try to do that for your kids.
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#23 of 32 Old 03-03-2008, 04:57 PM
 
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Unfortunately, you can eat ramen for a year, and if you're only making 18,000-22,000 to start (before taxes!), you're still going to be scraping for years before you have enough for a down payment on a house. Even more if you do a "stipended" volunteer job (I taught middle school on an Indian rez...my starting salary in 2000 was 11,000/yr...it was a whopping 12,020 after three years ).
As someone who used to work in human services and is married to a writer, I absolutely agree with you. Seems these days there are a lot of jobs that you can do that are socially beneficial but pay for beans and you never will make enough to buy a house.

To answer the OP, I am living with this situation now. My FIL is pretty well off and he helped us buy our house, we could only afford like 5% down and he gave us the 20%. Which meant a lot, then last year hard times hit us, I lost my job and dh lost half his clients. Well FIL had established a family trust for dh upon FIL's death but in the last 8 mos he has opted to help us with the mortgage. I am sure he grapples with wondering if he doing the right thing but personally it means so much that he is helping us know. It means we get to keep our house and right now things are starting to turn around so we hope that within the next 6 mos we no longer need his help.

Like other posters have stated I am into the villiage concept, I know that as FIL gets older if there is anything we can do for him we will, same goes for my dad. Hell, when my Mom was dying and my Dad lost his job, I helped out by paying my Mom's Cobra coverage and their rent. It was a hardship for me but it seemed like the right thing.

Shay

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#24 of 32 Old 03-03-2008, 06:15 PM
 
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This is a great thread btw!!

My take, both my parents and ILs are still living. ILs are 77, my parents are 62. My dad took an early retirement a few years ago, FIL worked until the day he turned 65. Both planned well and now live very well in retirement. A few years back, ILs gave each of their 9 children a check for 5K. DH paid off his truck, others used it for down payments on real estate, travel, eye surgery you name it but it was greatly appreciated. they did it just because. It was nice, no more car payment. But there were no strings attached.

I think as pps have said, if its depended on, expected to survive, or the giver expects you to spend it on a certain thing, the giver than has a say in how "their" money is spent. Or bailing out someone from the land of stupids, you will just be doing it again in a few years IME and IMHO.

When Maggie was born very preterm, both parents pitched in with caring for Liz my dd1, driving me to the hospital etc and anything we really needed. One day a few days after Maggie was born, we were at the ATM and my dad handed me $100 cash. He said, you will need this the next few days. Then turned and moved on to something else. On the way home that day he said call him and my mom for anything whether we needed money or whatever. My parents winter in FL so they came up the day after Maggie was born. I know its very hard on my mom to not be near us during the winter months. She misses us and when Maggie was born she said it was very hard to have to wait to get there a day.
When they come home in the Spring thru fall, they spend a lot of time with my dds and us. They like to spoil the kids a bit but we wont let them. I dont care if they spoil them with their time (which both do) but things I am not crazy about.

I also do not like when my Dad offers to pay for things- work on my house, plane tickets etc. We make decent money and can afford to do certain things and DH also does not like "outpatient care" as he calls it. He feels like others have said, we need to make our own way in the world. My parents paid for my education as well as my siblings and our weddings as well. I lived at home after college for 2 years and paid some money which was given back to me when I moved out. DH had also got to live at home and we both were able to save up a down payment on our first home.

To make a long story longer....

Last month in this nasty winter, our furnace died. $3700 to replace. We are also refiancing our mortgage at a lower rate and with the lower rate and cash out to pay for the furnace, its still lower than before. My parents sent us a check for $1000. I called DH at work to see what he thought of getting this $. His patient at the time put it into perspective. She was about my parents' age. She said the reason they sent this to us- they want to help us but cannot be here present so the way they can help is by sending the $ and we should cash it. Even if we just put it into savings, we need to take it according to her.

So in someways I can see helping out, but other ways I dont think its a good idea. So I guess, I can see helping someone who is working hard to get to that next level or goal or a once in a while down on your luck but all the time, you are not helping, you're enabling.

"The true joy of life is the trip. The station is only a dream. It constantly out distances us."
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#25 of 32 Old 03-03-2008, 06:45 PM
 
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I would be happy to pay for any homeschooling curriculum needed for my grandchildren, museum memberships, classes etc if my children chose to homeschool them. I could see helping pay for the grandchildren's college.

Dh's mom, for example, gave us the down payment for our house. She's not super well off. The money would have been dh's inheritance, but she wanted to see him use it now.

In the situation the OP describes, where everyone is doing well financially, I don't see myself giving anyone money unless it's for something specific.

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13yo ds   10yo dd  8yo ds and 6yo ds and 1yo ds  
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#26 of 32 Old 03-03-2008, 06:45 PM
 
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I think its also important to consider how much you're funding... for example, we were given cash recently by GMIL. Its less than 1% of our annual income, but its a nice gift. We can go visit her and ski with the $. We probably could have done it anyway, but it might have been a stretch. I think that's reasonable, and we don't expect it, but do appreciate it. Likewise we received 25% of our first home downpayment from ILs, not 100%. And it wasn't offered until we were looking for a place, so we had a downpayment ourselves...

My brother OTOH, lived with my parents for a decade post college. Didn't pay rent, spent everything on partying/trips, etc. He's finally buying a house, with a downpayment from my parents... It's just different. I won't do as my parents have for certain!

Happy with my DH, 2 kids, dog, fish, and frogs
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#27 of 32 Old 03-03-2008, 08:41 PM
 
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Originally Posted by EviesMom View Post
My brother OTOH, lived with my parents for a decade post college. Didn't pay rent, spent everything on partying/trips, etc. He's finally buying a house, with a downpayment from my parents... It's just different. I won't do as my parents have for certain!
We should hook your brother up with *my* sister...she's 28, lives at home rent-free (just never moved out), and is going to college for the THIRD time on my parents' dime.
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#28 of 32 Old 03-03-2008, 08:50 PM
 
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LOL! My brother is actually getting married next month to a woman who currently lives at home with her parents. I'm actually kind of excited that I'll be able to visit my parents without him there.

Happy with my DH, 2 kids, dog, fish, and frogs
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#29 of 32 Old 03-03-2008, 09:01 PM
 
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My parents and ILs are all in their mid-80s. They are children of the Depression, and I think it's a mind-set that's hard to overcome. Dh's parents, in particular, are cheap beyond belief. They never give anyone a gift that costs more than $25, and they have a great deal of money. Dh is the executor of their will, so I have some idea of their assets. I wish they'd spend a little more of their money--on them, not on me.

Personally, I've got a little of that streak in me. What I would probably do is help out with college funds in a modest way if my both my kids had children. I would make sure, however, that the amount each family was getting was the same, and if one had kids and one didn't, my childless kid would get an equal amount.
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#30 of 32 Old 03-03-2008, 11:01 PM
 
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I fall into the don't spoil them category.

I'd give nice gifts, including some family travel and help with down-payments on houses provided they could contribute themselves and afford the mortgage. But I would not give money to subsidize their living on a regular basis.

I'd also be spending a lot of that inheritance on charitable giving or opening a foundation.

Katie, mama to one big boy (6/03) and one little boy (12/08).
It is never the wrong time to do the right thing.
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