How to Gift Money to Children

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Watching your child open any gift is an amazing feeling. Nothing beats watching their eyes light up when they get a new toy or item. The older your children get, the fewer toys and other objects they want. Instead, your child may start wanting money instead of you finding them something.

Plus, it is a win-win situation. You do not have to spend hours searching for specific items, and they get to learn not only responsibility but how to save and get the object they want the most. In other cases, gifting money may be an early inheritance. But how soon is too early?

To help resolve all your concerns and questions, we created this guide to help you understand how to gift money to children. 

Questions to Consider

As a parent, you may have some questions or concerns about handing over money as a gift. If anyone knows their child the best and how they will react when gifted cash, it will be you. Before giving your mini-me some serious dough, check out these questions you need to consider.

Am I over-giving?

There is no right amount of money to give your children. It truly depends on their age, their needs/wants, their lifestyle, your budget and their responsibilities. No child will be the same when it comes to the amount of money they should receive. 

To truly know if you are over-giving your children money, you should keep in mind your budget. Are you still able to live comfortably and pay your bills after giving your child money? Are they frivolously spending their money? Are they boasting about their gift to others? 

If the outcome of giving too much money is more negative than positive, then you are over-giving. Do not be afraid to ask other similar families to see how much they give their kids. 

If I give it to one child now, must I give it to all my other children?

Jealousy is a huge issue that many parents and children have to handle. When it comes to gifts, especially money, the other child may feel entitled to getting compensation as well. Before you start pouring all your hard-earned money into your other kids’ accounts, you need to remember that it is your money, so your rules. 

Yes, you need to be fair to all your children. But that does not mean you should hand out money anytime you give it to one and not the other. Justify not only yourself but your children anytime one of them gets jealous. Remind them about birthdays, holidays and good deeds where not everyone gets money at the same time.

How responsible will my child be with this amount?

Every child is different. Some are more responsible than others when it comes to money. Spending and saving money are actions that everyone must learn. They also have to deal with the consequences when they spend all their money. 

If you notice that your child spends everything you give them quickly and asks for more, then, most likely, your child is not responsible enough to hold onto the money on their own. You may want to save their money and give them to them later once they are older or more responsible.

Strategies for Gifting to Adult Children

Young children are not the only kids that you may have. Even as your kids get older, they are still your babies. Once they hit adulthood, you will let them out of the nest, but will still help them out from time to time. If you want to gift money to your adult children, here are some ideas you can check out.

529 College Savings Plans

Each year college and university tuition continue to climb. Before you know it, you and your child could be swimming tens of thousands of dollars in student debt. Instead, check out 529 college savings plans.

529 college savings plans are tax-free qualified tuition programs. Almost every state has at least one 529 plan that you can choose from, and your student can use it at any college in the nation. Talk to your accountant or financial advisor before investing in a 529 college savings plan.


A UTMA is a Uniform Transfers to Minors Act. This act allows a minor to receive gifts like money, art, royalties and real estate without help from a guardian or trustee. If the minor is too young, the gift giver or an appointed custodian can manage the account until they become of age. A UTMA also shields the minor from taxes on these gifts as long as they do not go over the specified value. 


Help your child with their accumulated wealth through trust. A trust is a financial arrangement that allows a third party or trustee to hold onto the assets (money in this case) for the beneficiary or minor until they are of age or legally able to obtain it. Typically, parents, grandparents or other family members will be the trustee or third party that handles the trusts.

Delaware Dynasty Trusts

Do you have family wealth that gets passed from generation to generation? Then, you need to set up a Delaware Dynasty Trust for your children. This trust will minimize gift and transfer taxes as the money or inheritance passes to the next generation. If you want to go with a Delaware Dynasty Trust, we recommend gathering the amount of all your assets and meeting with an attorney to get everything settled. You do not want generations down the line to worry about avoidable problems. 

Family Vacations

Sometimes your children may start a family at a young age. There is nothing wrong with that, but it may put them in a financial bind. To help out your adult children struggling to pay the bills but need a break, you can sponsor a family vacation for them. 

The family vacation does not have to be extravagant or expensive. All you need to do is find a place where the family can let loose for a few days. Plus, you can even join in on this trip since you are paying for it! Before planning the trip, ask your family where they would like to go and how much time they can take off, so you know what works best for them and their schedule.


Continuing education is not cheap. Depending on the school they are attending, you can spend over $75,000 a year. Most families do not have this amount of money sitting around for their children. However, all that money-saving you have been doing will come in handy when they do start school.

Starting a savings account just for continuing your child’s education is a great way to give money. They may not be too thrilled about it at first, but the moment they see their student bills or loans drop will be the time they truly realize how much you are actually saving them. 

Medical Expenses

Unexpected accidents happen to anyone of any age. Young adults typically have more accidents since they like to test how far their bodies can handle certain situations. If you have an adventurous, rebellious or clumsy young adult, you may want to set aside some money to cover unexpected medical expenses. 

Tax Implications for Larger Gifts

Do you have a little extra money to give your kids? While it is great that you have the generosity and budget to give your child a large amount of money, legally you cannot always give it all to them without taxing some of it.

Yes, the money or gifts you give your children can get taxed. Check out how much you can give before submitting your taxes and if the money you give them counts as income below.

How much money can a parent give a child without tax implications?

Even though you are giving your money to your child, the government can still tax it. However, not all amounts are taxable. As of 2021, you can have a tax exemption as long as the money gifted does not exceed $15,000. Anytime you give your child large sums of money, make sure to keep track of how much you send for tax purposes. 

Does money from parents count as income?

Deciphering money gifted to your children as an income or as a present can be difficult. Receiving money from your parents does not count as income as long as it is not from a job. Therefore, it is not taxable. However, that does not mean your parents should force you to work without pay. If it comes to this, contact the IRS and a lawyer to settle things out. Even though money does not count as income, it can still be taxable if it exceeds the $15,000 limit.

Giving your children money is not a bad thing. Instead, it can do wonders for your child’s future. Instead of worrying about how to handle the gifting process, check out this guide any time you get lost. Need more tips, tricks or advice on different lifestyle topics? Check out our blog for more details.

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