Gifts of money to children.

[Astrid]

Thanks Ladies.

My dad is pretty good about whatever I choose to do with money he sends the girls, but MIL, well she is very insistent it goes to the bank account and we are NOT to touch it. This also applies to money sent by her parents.
It makes it hard when they might get say $100 from both side of the family, then we say they can spend $20 and we bank the rest, who's gift are they kids spending??

To clarify, I once talked about a hypothetical situation with MIL about childrens' money and what other families do. She took it that I pocket the kids money and use it to pay the mortgage. She has been paranoid ever since then. I am tempted to tell her to start a bank account for the girls herself and leave us out of it. There will be a point where we will need to take the kids money and put it in our mortgage, otherwise they will be taxed on the interest. I am not looking forward to that day and having to explain that one to her

[wysiwyg]

Thanks Ladies.

My dad is pretty good about whatever I choose to do with money he sends the girls, but MIL, well she is very insistent it goes to the bank account and we are NOT to touch it. This also applies to money sent by her parents.
It makes it hard when they might get say $100 from both side of the family, then we say they can spend $20 and we bank the rest, who's gift are they kids spending??

To clarify, I once talked about a hypothetical situation with MIL about childrens' money and what other families do. She took it that I pocket the kids money and use it to pay the mortgage. She has been paranoid ever since then. I am tempted to tell her to start a bank account for the girls herself and leave us out of it. There will be a point where we will need to take the kids money and put it in our mortgage, otherwise they will be taxed on the interest. I am not looking forward to that day and having to explain that one to her

So in that situation if you and the children are never to touch it then actually yes I think she should manage it - I suppose that is what my IL's are doing. I know I would find it very difficult to not be able to make decisions about how best to use the money to the children's benefit but then also have to deal with making sure it isn't taxed etc.

Oh and yes the same gift frequently comes from more than one person - they don't meet they will never know, quite a few people have given zoo memberships to the children.

[Astrid]

We do live in a different state from the rest of the family, so that is the main reason for sending money, plus they always say they just don't know what to buy the girls. So I do find it odd that they are then insistent that the money goes into the bank account. At the end of the day, even with compounding interest, $20 twice a year is not going to make a huge difference to the girls when they are 18.

I think we will just do what we think is best for the girls at the time and not tell them.

[~ Mylitta ~]

There will be a point where we will need to take the kids money and put it in our mortgage, otherwise they will be taxed on the interest. I am not looking forward to that day and having to explain that one to her

I'm going slightly off topic, but the kids accounts would have to have enough money in them that they are generating over $18,200 a year (each) before they even start to pay tax (as it's treated the same as normal income). In a pretty standard savings account that means they would have to have around $400,000 before they pay anything in tax. If you are worried about paying a significant amount of tax they would have to have a lot more than that in their accounts. If they are lucky enough to have that much then that's fantastic and I'd be giving MIL a pat on the back hehehe.

[~ Mylitta ~]

In response to the OP questions... I think it's ok for the giver to state their preference, but ultimately it's up to the parents or the child (if they are old enough). I'll admit that if money is given to my kids (who are 9mths, 24mths and 3years) I tend to just put it towards nice things that I would buy for them anyway. For example, some nice new clothes, or some Montessori activities, or craft supplies etc... I figure it's still for them and they get enjoyment out of it, so it's win-win