How Parents Can Help Their Adult Children

In today’s economy there are many young adults that are struggling to find work. Many of these young adults are now having to turn to their parents for financial support. It is important for parents to be aware of any gift tax implications they might have when providing financial assistance to their children. “Each individual has the ability to gift $14,000 a year to each person without using up any of his or her lifetime exclusion. A married couple can then gift $28,000 to an adult child without any gift tax impact at all.”

People should be aware that the $14,000 amount is inclusive of all gifts whether its direct gift or a withdrawal from a trust. The Internal Revenue Code also has a specific provision that lets parents pay their child’s college tuition directly to the University without defining it as a “gift.” There are several other ways that parents can help their children. People should seek the advice of an experienced estate planner to design a strategy that is right for their individual circumstances.

See Stacie J. Rottenstreich and Karin Barkhorn, Helping Your Adult Children, Bryan Cave, November 11, 2015.