Have You Been Gifted Money In Lieu of Inheritance?
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I recently saw this advice column where a 73-year-old woman wondered whether to gift money to her kids instead of letting them inherit, and it made me think of my friend R, and I thought we should discuss. Have you inherited any money, yet — or been gifted money in lieu of inheritance? What have you done with the money? (If you're older, do you plan on gifting your kids large amounts of money?) How old were you when you received the money, and what kind of difference did it make in your life?
This made me think of my friend R because I clearly remember her getting gifts (I thought of $20,000ish, but that memory is probably incorrect) when we were in our early 20s. She was already incredibly frugal and careful with her money, so pretty much every penny of these gifts went to her savings. Within a few years, she had enough for a downpayment on an adorably tiny studio on the Upper East Side. She stayed in that studio until she had her son, and sold it for about 3x the price she'd paid.
Another friend just lost both her parents in the space of a year or two, and her husband happened to mention how much they're both so much less stressed about money now that they saw how much her parents left to them. Her parents had already sold my friends their house for a discounted rate, which removed another layer of worry for them also.
What are your experiences with this, readers — have you inherited money, or gotten monetary gifts in lieu of inheritance? Do you get regular 5-figure checks from your parents, such as at holiday time? How have you used the money? Do you plan to do the same for your children if you can?
Stock photo via Pexels / Karolina Kaboompics.
I get annual gifts from my mother. She gets them from her father. At the moment, I use them for ordinary living expenses, as I am not able to support myself (underemployed and looking). But hopefully soon I will be able to just put them toward retirement/investment. It’s between $10k and $15k depending on what my mother feels like giving.
I will be lucky if I don’t have to give my parents money.
+1
Same. These questions always seem so theoretical to me.
I’ve been sending my parents money monthly for 10+ years. Not a ton, but not a small amount either. They’ve been absolute lifesavers when it comes to helping out with my children (two boys, 6 and 2), and now that we have a house (with an in-law suite) they stay over all the time and help with cleaning and fixing or renovating things. I love our relationship and my husband does too.
Not in cash but my parents treat us to really nice vacations (with them) most years.
We get yearly checks for $15,000, but that just started a few years ago. We try to use it towards vacations, to replenish our emergency fund, and I invest the remaining in $2500 chunks over a few months.
I would love to do this for my children and may start in a decade or so. I don’t know how much we will need for memory care and health care in our last decades and need to keep that in mind.
My parents have periodically given gifts to me up to the gift tax limit. For a few years, it was to help me pay off my condo earlier so I could afford to take a job in a field that paid significantly less. At another interval, it was because I had to replace my 19 year old car. They have gifted stock to me as well. I also will inherit seven figures when my parents die. Oddly, I live a frugal life compared to what one might expect.
My parents’ attitude is that they can live very comfortably on their current incomes and gift money to me. So there isn’t any reason not to help me work in a lower paying field for a cause we all believe instead of waiting to inherit the money when I’m probably in my mid to late 60s if my parents live as long as they would be expected to (they were quite young when I was born and their parents all lived to be healthy 90-something year olds).
My in laws have started with whatever the individual gift limit is annually. They are in a position where if estate tax thresholds revert to what they used to be their estate will be taxed and, like good republicans, are horrified by it.
We put it into our kids’ 529s, though last year MIL told us she wanted to give each of our kids $12k because that was the amount she paid toward my nephew’s trade school tuition. She was sort of surprised we just had her wire it to their 529s; I think she thought maybe we’d like…buy then a car in the future?
They are financially comfortable but you never know what’s coming.
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I’m not seeing a lot of consideration for the consequences of a “stepped-up” basis for inherited stocks and real estate. Sometimes it makes more financial sense to wait to inherit a family home than to receive it in advance of the demise. Not a pleasant topic, admittedly, but re-starting the basis upon inheritance can be a HUGE advantage for heirs.
I’m one of the ones who, along with my siblings, had to give my parents money in their later years.
My mom passes my brother and I the federal gift tax limit in stock every year from funds she inherited from her parents that we would otherwise receive in an inheritance. While her estate isn’t enough that it would be impacted by current estate tax limits, her reasoning is that you never know what they will be by that time. My brother and I keep this in separate investment accounts, as we are both fully self-supporting, though she has said that I am free to pull from that account for a down payment if needed. This is also money that I would use if for some reason she ran through her funds due to health or aging.
I was! Explicitly! My grandmother remarried late in life; my step-grandfather gifted his step-grandchildren in lieu of inheritance. He wrote us a very nice letter that explicitly said the gift (around half the gift tax limit) was our inheritance. I was around 20 at the time, I think, and invested it in two index funds. It’s been fun watching it grow (and I was lucky that I didn’t need to spend it on college tuition).
It was a one-time payment. I think it helped maintain family harmony with our step cousins. None of us were going to go after his savings when he died, but it was good for them to know that we couldn’t.
I remember being very impressed by the whole mechanics of it when I took trusts and estates in law school.