Grandparents often hear the message loud and clear: their grandkids don’t need more “stuff” for the holidays.

Parents of young children, drowning in clutter, urge them to “buy anything but toys.”

So, what are well-meaning grandparents supposed to do when they want to bless their grandkids?

Sure, we all know that giving experiences is a great—and often preferred—solution.

But let’s be honest: my toddlers still love getting toys from their grandparents.

In fact, my daughter remembers exactly who gave her each gift and expresses her gratitude every time she plays with them.

That said, this blog is focused specifically on those looking to give meaningful financial gifts to their loved ones.

Quick Q&A About Financial Gifting for The Holidays

Is anyone going to owe tax if I give them money as a gift?

• No, you are allowed to give up to $18,000 to as many individuals as you want without reporting it (as of 2024). They don’t report it and neither do you. If you are married, you and your spouse can give $18,000 EACH to each person you gift to. If you give beyond that, then you will have to report it on your tax return and it will be deducted from your estate exemption (which probably won’t apply to you anyways). 

If I want to gift money specifically for the use of education or college, how do I ensure it is used for this purpose?

• You can gift someone money for use of college by paying the school directly. In fact, if you are paying directly to an educational institution or a medical office, you can “gift” as much as you want with no limit.  Alternatively, you can open a 529 college account with a place like College Advantage or through your financial advisor. Read my article on 529s here for a lot more description on how these accounts work. The dollars can stay in your control, and you can cut checks straight to the financial institution. Most importantly, the money can grow tax free for years! 

Should I gift family cash, appreciated stock, or something else?

• You can gift your family cash. Or, if the person you are giving to is in a low tax bracket, you could consider giving them some appreciated stock. If you have Apple stock with $10,000 of unrealized capital gains, you might pay $1,500 of tax when you sell it. However, if your 19-year-old grandson has a $20,000/year part time job, he could receive that Apple stock from you and pay $0 tax when he sells it, since he is in the 0% capital gains tax bracket.  

How do I make sure my kids know how to steward their money well?

• Honestly, they will learn it from you. They will watch you. Read How to Teach Kids About Finance & Investing for 4 ideas on practical ways to teach your kids about money. Also walk them through 8 Key Financial Considerations Before Your Child Turns 18. Even if your kid is well past 18, it is never too late to learn.  

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Unless financially giving to kids and grandkids hurts my clients’ chances of having a successful retirement, I always encourage it. There is so much joy in giving. Money can make an impactful difference to a young family who is struggling to raise young kids vs. waiting for that family to receive it through an inheritance when you are gone and their own kids are grown and out of the house. I hope this gives you some ideas and inspiration.😊