Five Questions on Gifts to Children
Why should we give? When, what and how should we give? Will gifts impact the self-esteem and initiative of the child? Can a gift plan transfer values to children?
Why Give to Children? – Some parents wish to start the inheritance process while the children are in their 40’s, 50’s and 60’s. Many children can use the help to purchase a home, pay down debt or save for their own retirement. Another reason is to teach conservation. Most parents who have significant resources have been careful to conserve their assets and build them up during their lifetime. By making transfers from those assets parents have the opportunity to see the effect (positive or negative) of inheritance on children.
When should a Parent Start Giving? – A parent could start giving when the child reaches the “age of financial responsibility.” Many factors enter into this decision. They should be sure they have sufficient funds to provide for their own long-term care if needed as well as provide for their own moderate life style through their lifetime.
What Should a Parent Give? – Studies show that gifts of cash are typically spent. If the hope is that children will invest and begin to build their estates, then gifts of property show much more promise.
Will My Gift Decrease Motivation and Self-esteem? – Nearly everyone knows of cases where an inheritance was given and it was spent in unhealthy ways. One of the best gifts is a gift of education; another very fine gift is help with a career or business.
How Do I Support Charity and Transfer Values to Children? - Values are caught and not taught. One especially effective way to teach the principle of helping others is to model that behavior through support of charities. Children realize that they are not here on Earth just to acquire the best homes, fastest cars and most exotic vacations, but also to find a sense of purpose and value through assisting others.