Q: My financial house is a fairly stable one, and yet my wife’s parents give us a significant financial gift every year. I feel they have no confidence in my ability to support my wife and children. How do I tell them we’d prefer they keep their money for themselves?
A: Me, oh my, or should I say you, oh yours! Have you ever heard the saying, “It is better to give than to receive”? Well, you seem to be overly focused on the money you receive and not the financial gift your in-laws are giving.
Though I have never met your in-laws, their annual gifts might actually have more to do with their financial situation than with their lack of trust in yours.
You see, there are several financial principals at work with these annual gifts. First, by giving money today, your in-laws are avoiding the payment of possible federal estate taxes and Indiana inheritance taxes when they die. Secondly, by removing those dollars from their ownership, they avoid the current tax burden created by the dividends and interest.
The hardcore financial reasons might also be wrapped in emotions and sentiment. By giving assets today, instead of passing them to you via an inheritance, your in-laws are afforded the chance to see you and your family enjoying those dollars.
So, accept these dollars in the spirit with which they are given. Spend them on something you wouldn’t otherwise buy or a vacation you might not normally take. You could even create a special investment portfolio with a portion of that gift and donate the earnings from that portfolio to your in-laws’ favorite charity. It would be a great way to create a legacy for your in-laws – one that would allow their gifts to keep on giving.
No matter what YOU do with the gift, allow your in-laws to do that which makes THEM happy – giving the money to you.
D.DRUMMOND OSBORN, CFP is a lifelong LaPortean and director of wealth management at Osborn Wealth Management, a Registered Investment Advisor, where he focuses on financial planning, investment management, and trust advisory services. Check him out on the web at www.osbornwealthmanagement.com and e-mail him your questions at drummond@osbornwealthmanagement.com.
