If you are a grandparent there are several things you can do to teach your grandchildren financial responsibility and set aside money for their future education and retirement. Before we get into actual suggestions, it is important that you understand the gift tax rules. You can give anyone, every year, an amount up to the annual gift tax exclusion. The gift tax exclusion is inflation-adjusted and is currently $17,000, which means that, in 2023, you can give any number of recipients up to $17,000. Thus, you can give each grandchild $17,000per year; and, if you are married, both you and your spouse can each give $17,000 for a total of $34,000 per year. Gifts in excess of $17,000 per donee can certainly be made, but doing so will mean the grandparent must file a Gift Tax Return (Form 709) and pay gift tax on taxable gifts in excess of a lifetime gift and estate tax exclusion $12.92 Million for 2023).
Of course, just handing out money to your grandchildren will not teach financial responsibility or meet specific goals you might have in mind for the money. The following are some suggestions.
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