The wisdom of Jesus’ words recorded in Acts 20:35 “It is more blessed to give than to receive.” (KJV) isn’t lost on our grandchildren. In fact, it feels so good to give gifts to our grandchildren, that sometimes we need to think through how we go about it. Especially when there is significant money involved.
From the grandparenting experts at AboutParenting.com
Giving Money Outright
“Some grandparents want to enjoy the results of their gifts. These grandparents prefer giving money outright, so they can see their grandchildren enjoy it. Currently grandparents can give up to $14,000 a year per grandchild without having to pay gift tax.
The problem with outright gifts is that many children lack the ability to spend money wisely. One solution is to put the money in a custodial account and name another individual — usually a parent — to control it. The rub there is that some parents aren’t wise managers either. Another complication is that the money will pass to the grandchild when he or she reaches the legal age of majority, which is 18 in most states, at which point the money can be spent for anything.”
Paying for Experiences
“Some grandparents choose to pay for camp, a cruise, a trip or other experience for grandchildren or even for the whole family. “I’m spending your inheritance,” such grandparents sometimes declare, but many families love this form of gifting.
Maybe you’ve been teaching your grandchild about money from an early age. If so, kudos to you. Still, there are no guarantees that such lessons will stick.
Before you give any substantial amount to a grandchild, know what kind of giver you are. If you will be upset if the money you give is not used wisely, stick to those methods that allow you the most control. Once the money is in a grandchild’s name, trying to direct how it is spent or criticizing your grandchild’s decisions will only cause hard feelings. And that would make the cost of the gift far too high.
A possible alternative is to leave grandchildren a bequest when you die. Learn more about willing money to grandchildren and other end-of-life planning that grandparents should consider.”
Study Shows Money Can Buy Happiness
We commonly think of using our money only to buy things. Or a more prudent use is to pay for expenses like college, transportation or insurance. Maybe those are wise choices. However, it depends if the grandchildren values the gift.
But researchers found that experiences actually brought more happiness than buying things. When spending time with your grandchild, maybe taking them on a vacation, is something they will always remember. These are memories they will visit often. Unlike material gifts that lose their luster over time, experiences sink deeper into the heart.