Grandparents: Don’t Sacrifice Your Future for Your Grandchildren


It’s amazing how some people sacrifice their own financial well-being for their children or grandchildren. A TD Ameritrade survey has revealed that 75% of grandparents have given more than $4,500 on average to children, while 81% have given more than $2,300 on average to grandchildren in the last year. With this, 47% of grandparents have made some sacrifices to help their adult child or grandchild and 27% used some or all of their savings to do this.

With those numbers in mind, here are some Dos and Don’ts for grandparents regarding gift giving to adult children and grandchildren:

DO:

Be upfront about your ability to provide gifts, and set expectations early. This includes having a plan beforehand of your own ability to give gifts.

DON’T:

Feel guilty about saying “no” while keeping your own financial future in mind.

DO:

Have a reason for giving the money. Make it a lesson on personal values, or some other meaning. It is an opportunity to share these values with a younger generation, and will (hopefully) prevent the recipients from feeling an entitlement to the gift.

DON’T:

Use gifts to influence decisions with your children’s families. An example would be giving money so that a specific school is chosen, and could build resentment with adult children who may feel undermined.

Along with these examples are the gift-tax implications that can arise. To avoid trouble, limit your annual gifts to $14,000 per donor, per donee. Your financial planner can, of course, advise on these issues.