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How to incorporate yearly "gift"?

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  • jfoxcpacfp jfoxcpacfp 
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    You will be ok without saving it – or even saving part of it. You are doing an excellent job with your finances. Personally, though, it bothers me that they plan to give you money with specific stipulations that you may be choosing to disregard in favor of getting opinions from this forum.

    I think you should discuss your plan for using the money with them before doing anything about it, as they are giving it to you for a specific reason. As the spouse, doubtful you want to be perceived as the person who dissuades their daughter/niece from enjoying it. They may get great vicarious pleasure from learning of the ways you have found to enjoy it. After all, they could choose to give it to charity and get a tax deduction instead (especially the uncle). But they hope to break what they perceive as a negative mental attitude about money in her family.

    I don’t think the purpose of your post was so much to get input on how to allocate it but to get reassurance and moral support. But, if you have difficulty conceding to their wishes, maybe you should not accept the money. I wonder if part of the reason they are parceling it out over a number of years (aside from the gifting implications) is to see what you will do with it.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #232125 Reply
    Lordosis Lordosis 
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    Is there any particular reason they are giving you a yearly stipend rather than just giving you a lump-sum right away?

    “Never let your sense of morals prevent you from doing what is right.”

    #232129 Reply
    fatlittlepig fatlittlepig 
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    I’m not saying he’s doing poorly but his savings per year are basically maxing out 401K x 2. No taxable savings, I wouldn’t say that’s doing great for someone with their combined salary. Just my point of view…

    #232132 Reply
    Avatar FIREshrink 
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    So you are forced to upgrade lifestyle a not insignificant$50k per year without an ironclad assurance the money will always be there. And what happens when XYZ happens and the money doesn’t arrive? No thanks. This is not a gift. This is a puppeteer’s ploy to exert control. Pass.

    #232176 Reply
    MPMD MPMD 
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    So you are forced to upgrade lifestyle a not insignificant$50k per year without an ironclad assurance the money will always be there. And what happens when XYZ happens and the money doesn’t arrive? No thanks. This is not a gift. This is a puppeteer’s ploy to exert control. Pass.

    Click to expand…

    um, what?

    you think this young couple should pass on $50k/year?

    it doesn’t sound like they are planning to upgrade their fixed costs to incorporate that amount, it sounds like they are trying to be thoughtful about what to do with this money. the OP is asking about how much they can save without offending the givers.

    it’s a little weird i agree and i’m not sure that the prescription is right for the diagnosis but that wouldn’t force me to turn it down.

    #232183 Reply
    Avatar LabralTerror 
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    So you are forced to upgrade lifestyle a not insignificant$50k per year without an ironclad assurance the money will always be there. And what happens when XYZ happens and the money doesn’t arrive? No thanks. This is not a gift. This is a puppeteer’s ploy to exert control. Pass.
    If we were using the money to buy a beach home in Hawaii, I would agree. But, as previously stated, we would not be purchasing any other fixed costs that we couldn’t finance independently if the gift was to stop.

    I’m not saying he’s doing poorly but his savings per year are basically maxing out 401K x 2. No taxable savings, I wouldn’t say that’s doing great for someone with their combined salary. Just my point of view…

    I appreciate the comment, and that’s what I am trying to get an unbiased viewpoint of. If we need to be doing more at our age and income level in order to be secure in retirement, I am willing to do that with a portion of this gift or making changes to our lifestyle outside of it.

    Click to expand…

    Is there any particular reason they are giving you a yearly stipend rather than just giving you a lump-sum right away?

    I don’t have the exact reason but I believe its to avoid any taxation as they can stay under the IRS gift limit, as well as not wanting us to disregard our own financial future and feeling “Set” already, as if our own income and savings don’t matter. I believe it’s in good faith and not some mental game they are trying to play. I hope I haven’t given off that impression here. It seems they are taking the approach of: “We aren’t giving you this money with the expectation of you socking it away at Vanguard. We want you to take and enjoy some of this now, making family memories that we weren’t as easily able to make when we were your age.”

    #232187 Reply
    Avatar LabralTerror 
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    Status: Other Professional
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    Joined: 07/20/2019

    You will be ok without saving it – or even saving part of it. You are doing an excellent job with your finances. Personally, though, it bothers me that they plan to give you money with specific stipulations that you may be choosing to disregard in favor of getting opinions from this forum.

    I think you should discuss your plan for using the money with them before doing anything about it, as they are giving it to you for a specific reason. As the spouse, doubtful you want to be perceived as the person who dissuades their daughter/niece from enjoying it. They may get great vicarious pleasure from learning of the ways you have found to enjoy it. After all, they could choose to give it to charity and get a tax deduction instead (especially the uncle). But they hope to break what they perceive as a negative mental attitude about money in her family.

    I don’t think the purpose of your post was so much to get input on how to allocate it but to get reassurance and moral support. But, if you have difficulty conceding to their wishes, maybe you should not accept the money. I wonder if part of the reason they are parceling it out over a number of years (aside from the gifting implications) is to see what you will do with it.

    Click to expand…

    Thanks, Joanna. Your opinion is very valued.

    Your perception is spot on. With the standard secrecy surrounding most people’s financial situation, I really don’t have an accurate perception whether we are on track or significantly behind schedule for our age/timepoint in our careers.

    #232189 Reply
    Liked by jfoxcpacfp
    fatlittlepig fatlittlepig 
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    If you want my honest opinion, the entire 50K is saved/invested and you pretend it never existed, then you work to increase your savings rate with your existing salary.

    #232190 Reply
    Liked by LabralTerror
    Avatar LabralTerror 
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    If you want my honest opinion, the entire 50K is saved/invested and you pretend it never existed, then you work to increase your savings rate with your existing salary.

    Click to expand…

    Appreciate your comment. Honest question: At what point do we become content with our savings rate within our existing income? If we aren’t expecting to retire at 50, etc, when do we know we have saved “enough” each year and can make discretionary decisions with any amount beyond it?

    #232191 Reply
    childay childay 
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    “We aren’t giving you this money with the expectation of you socking it away at Vanguard. We want you to take and enjoy some of this now, making family memories that we weren’t as easily able to make when we were your age.”

    Click to expand…

    I agree with JFox more or less. You are already relatively well-off financially.  Gifting someone $50k and asking them to spend it all is rather odd.  I mean, I could come up with ways to do it..  It would be a different story if you were rather destitute living on SSDI or something.  You can afford vacations on $170k household income as I’m sure you know.  Myself, I would consider putting it all in taxable.  But this forum is full of supersavers as you also know I am sure

    I think you should discuss your plan for using the money with them before doing anything about it, as they are giving it to you for a specific reason.

    Click to expand…

    This.

    #232192 Reply
    Avatar FIREshrink 
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    I would explain we need to be free to do what we think is best for our family, in toto, or we cannot accept the gift. Money isn’t everything.

    If you are free to do what you want with the money, then it would be reasonable to me to spend 25-50% and save/invest the rest.

    #232194 Reply
    Liked by LabralTerror
    Avatar HiCOLAdoc 
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    Status: Physician
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    Of course you should accept the money!  This is a fantastic gift  Then, as suggested above, talk to your family about their hopes and expectations surrounding the transfer.  It seems they are not asking anything pernicious or difficult.  Here are some suggestions

    Go on some really nice vacations.  Maybe bring them along.  When my wife’s grandparents were still alive we rented villas in France and Italy and brought our parents and her grandparents. It was fabulous.  Great memories

    Get a nicer car

    Educational opportunities for the family?

    Meals out, clothes, fun ‘toys’ like a wakeboat

    Document all these fun things with photos etc for the relatives. I think it’s important not to buy things with large ongoing costs as that could be problematic if the transfers stop.  You can still increase your savings as money is fungible.  Presumably you already spend some money on vacations, meals, toys, clothes so this gift would free up some of your current spending

     

     

    #232197 Reply
    Avatar LabralTerror 
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    Status: Other Professional
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    Joined: 07/20/2019
    Splash Refinancing Bonus

    Of course you should accept the money!  This is a fantastic gift  Then, as suggested above, talk to your family about their hopes and expectations surrounding the transfer.  It seems they are not asking anything pernicious or difficult.  Here are some suggestions

    Go on some really nice vacations.  Maybe bring them along.  When my wife’s grandparents were still alive we rented villas in France and Italy and brought our parents and her grandparents. It was fabulous.  Great memories

    Get a nicer car

    Educational opportunities for the family?

    Meals out, clothes, fun ‘toys’ like a wakeboat

    Document all these fun things with photos etc for the relatives. I think it’s important not to buy things with large ongoing costs as that could be problematic if the transfers stop.  You can still increase your savings as money is fungible.  Presumably you already spend some money on vacations, meals, toys, clothes so this gift would free up some of your current spending

     

     

    Click to expand…

    HiCOLAdoc, can I nominate you to respond to all of my future “spending vs saving” posts in a similar fashion?!  I like your style, but be careful talking around here like that! 😀

    #232214 Reply
    Lordosis Lordosis 
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    Status: Physician
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    if I ever gave my grandkids $50,000 and he put it into a vanguard index fund he would be sure to get another $50,000 next year. If my other grandkid spent it on a fancy car that would probably be the last gift.

    “Never let your sense of morals prevent you from doing what is right.”

    #232216 Reply
    Liked by LabralTerror
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
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    Joined: 01/26/2017

    If you want my honest opinion, the entire 50K is saved/invested and you pretend it never existed, then you work to increase your savings rate with your existing salary.

    Click to expand…

    Appreciate your comment. Honest question: At what point do we become content with our savings rate within our existing income? If we aren’t expecting to retire at 50, etc, when do we know we have saved “enough” each year and can make discretionary decisions with any amount beyond it?

    Click to expand…

    Personally I would try and double what you are saving now, again the extra 50 I would directly deposit into the market or 529s. Good luck.

    #232219 Reply

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