Gifting €3,000 to child without them knowing for now

misemoi said:

I would make it conditional on them contributing a like or multiple of the 3k once they are able to avoid this.

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I think that this is an excellent suggestion, and rather than trying to lock them out of the account or put it beyond reach, use it as an educational opportunity. Most 18-35 year olds today are aware of the challenges around mortgages/housing. Sitting them down and setting out a plan to get them on the ladder is an excellent idea. Explain that this is not a slush fund, drinks and party money, contribution to a shag-mobile etc and get their buy-in. Sure, they may wobble and mis-step along the way, but in addition to starting the monetary accumulation, planting the seed in the back of their minds about saving/deposit/mortgage sounds like a win-win. Some of the suggestions about putting it into an investment product, or a cumbersome yoke like state savings might put the money at one remove and discourage spur of the moment splurges. Bare trust etc sounds pretty ott. And definitely get them to commit to making some contribution, appropriate to their circumstances, no matter how small.

Another option would be to put the offer on the table, ask them to think about it and come back to you in writing with a commitment about the ultimate use and keeping it at arms length in the meantime. It really depends on the personality you are dealing with, and the level of maturity.

The week I started working, my father sent a lad from Friends Provident to my desk at work with explicit instructions to get me to sign up for a "with profits endowment policy" for at least £10 per month (It was fado, fado, and this impacted heavily on my disposable income). He did such a good job selling I actually signed up for 2, one 10 years and one open ended. Years later these paid the deposit on my first mortgage in full.

Freelance said:

Some of the suggestions about putting it into an investment product, or a cumbersome yoke like state savings might put the money at one remove and discourage spur of the moment splurges. Bare trust etc sounds pretty ott

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What do you suggest for a 'Gifting €3,000 to child without them knowing' where money has to be 'in possession' of said child?

GSheehy said:

What do you suggest for a 'Gifting €3,000 to child without them knowing' where money has to be 'in possession' of said child?

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The OP clarified that the child is 20yo. So in line with other posts I’d see it as an annual gift of €3,000 (or double that if there are two parents gifting). The thrust of my post was that rather than attempting to hide it or somehow put it beyond reach, address the concerns with the adult child, using it as a learning opportunity and to instil a savings/accumulation habit.

Is it possible to put money into a pension for a child (under 18 or over 18) with their knowledge using the SGE? They’d still have to save for a house and go through all those important life lessons, but there would be less pressure to load up a pension in later life, at which point the life lessons have been learned or never will be.

Maybe it's just me but I find the inclination of some people to micromanage their adult childrens' affairs in this context a bit odd...

ClubMan said:

Maybe it's just me but I find the inclination of some people to micromanage their adult childrens' affairs in this context a bit odd...

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Having witnessed the negative outcomes of people receiving large sums of money at various ages, I find it a bit odd that so many parents are willing to roll the dice with their children’s future just to save a few quid tax.

I think it stems from us as a generation realising our kids won't be able to afford housing without a gift. It's a vicious cycle but my kids will need to live somewhere. While providing me with an education was sufficient to ensure my future prosperity, it is something different for the next generation.

galwegian44 said:

I have full access to these accounts (with their permission) and manage the investments side but the accounts are owned by my children.

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You should check the terms and conditions of the investment provider.

I suspect they forbid effective control by a third party.

Zenith63 said:

Having witnessed the negative outcomes of people receiving large sums of money at various ages, I find it a bit odd that so many parents are willing to roll the dice with their children’s future just to save a few quid tax.

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The best lessons are learned through education/edification. The next best ones are learned through making one's own mistakes.

Dr Strangelove said:

You should check the terms and conditions of the investment provider.

I suspect they forbid effective control by a third party.

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From my reading as long as the account is solely in my child's name, they have full legal access and final control over it, then there are no issues. They can withdraw funds or make investment decisions independently if they wish but have chosen not to do so (yet). An important aspect is their education on finance and investments, I look forward to the day when I'm no longer involved. Thanks for the advice.

To the OP, it seems you both want to gift something to an adult and also not have them know they received the gift.

I should hope this is not possible. If you imagine a situation where it’s not your child I’m sure you will agree.

Also to whoever suggested removing post, it is definitely an offence. I suspect changing a password to an account in someone else’s name is too.

Feels like this issue would be better dealt with from a relationship / parenting / financial education perspective.

ClubMan said:

The best lessons are learned through education/edification. The next best ones are learned through making one's own mistakes.

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I agree with that for most things in life, however some of the consequences in this particular case do not come with the option of a second chance, which means it all comes down to education/edification. At best I think it is misplaced confidence in one’s parenting abilities to believe they can predict and educate a child with only 2-3 years experience.

To be clear I’m not in the least bit worried that a child will spend all the money on travelling the world or a shiny car, those you learn from. I am thinking of injecting cash into a mental health crisis or the beginning of a drug/gambling addiction or fostering a poor work ethic or lack of ambition through midlife - the kinds of things where they don’t get a second chance and you can trace the cause directly back to your trying to save a few quid tax.

Maybe don't gift the child the money until you are satisified that they have absorbed the lessons of the financial education you have provided and are ready to handle the responsiblity?

I realise that you miss out on a couple of years of the small gains exemption, but tax efficiency probably shouldn't be your first priority here. Never let the tail of tax wag the dog of common sense.

TomEdison said:

Maybe don't gift the child the money until you are satisified that they have absorbed the lessons of the financial education you have provided and are ready to handle the responsiblity?

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That’s really what all these types of threads are trying to figure out how to do, tax efficiently.

Over many years of reading them I’ve yet to see a way it can be done to leverage the SGE, so as you suggest I’m keeping everything in our name and working to be in the best financial position possible to support our kids when they need help to buy a house in their thirties etc. But I keep looking just in-case.

If the only way to acquire competence in personal financial management is actually to have responsibility for the management of money, with the attendant risk of losing it though mismanagement, then my child must either risk losing money that I have gifted to them or risk losing money that they have earned and saved. One way or another, on this view the "risk losing money through mismanagement" phase is one that everyone has to go through before they can be a competent manager of money.

Myself, I don't believe that this is the case. It is possible to learn the basics of financial management, learn to understand risk, learn to balance competing objectives, etc, beforfe you actually have any money to manage. But I can't know for sure that my child has learned this unless and until they actually have money to manage, and they manage it well.

So, I can defer making gifts to my child until they have demonstrated their ability to manage it competently or I can make gifts in advance of this when I believe their financial education is complete and they have learned what they need to. The latter course is an act of faith, to some extent. But lots of things in life are an act of faith; we make acts of faith all the time. And, if I'm never prepared to make an act of faith in my own child, that's a sad state of affairs.

It occurs to me here that, as parents facing this issue, what we are actually grappling with is our own attitude to risk. Our object for the money we have saved is to benefit our children. Ideally, the most effective way to acheive this is to give it to them; that maximises their freedom to use it as they wish and they are better positioned than us (or anyone else) to know what way of using it will be of most benefit to them. But in doing this we face the risk that they will lack the understanding or competence to use the money in a way that maximises the benefit to them — whether through ignorance, through immaturity, through poor judgment, through impulsiveness or through some other factor. We're prepared to run the risk, or we're not. But the decision shouldn't be affected at all by tax considerations. The availablity of the small gifts exemption doesn't make my child any better of a money manager than they would be if there were no such exemption.