Getting advice is often a good idea when giving sums of money to your children.
There are some ways to give money to children that can result in difficult issues, as Kiplinger points out in “5 Ways NOT to Gift to Children … and 5 Better Ideas.”
Giving children a little money now might go a long way to helping the child make a lot more money later. However, many parents are so eager to give to their children that they do not think through the best ways to make the gifts.
The most important thing to understand is how giving a child something might affect them and you in the future. For example, if you give a child a large sum of money outright and the child gets divorced, it is possible that your child’s spouse could get part of the money in a divorce settlement.
Another common problem people run into is naming a child as the joint owner of a piece of property. This can lead to big problems later if the child has financial problems as creditors can go after the property.
The best thing to do is to be careful and talk to experts before giving money to a child.
Reference: Kiplinger (January 2017) “5 Ways NOT to Gift to Children … and 5 Better Ideas.”
