“It’s an insane market.” (Photo subject is a model.) – Getty Images/iStockphoto
I have a moral dilemma, although it’s a good one to have.
I want to buy a house, but it’s almost impossible to afford one in my area. Tiny terraced houses with one bathroom upstairs and no ensuite that were built for a pittance are selling for $750,000. It’s an insane market. My father has offered me $250,000 as a “down payment” so I can afford to use my savings to buy a home.
It means I will have a very small mortgage and can afford to buy a home. I could also rent out a room to supplement the mortgage. But he told me NOT to tell my two siblings “under any circumstances.” I’m in my late 40s, so it’s really now or never to get a foot on the property ladder after many failed attempts. Both my siblings have homes.
The monetary gift would be considered an early part of my inheritance. Of course, I don’t want to jeopardize my father’s kind offer, but what do you think? Am I morally obligated to tell them?
It’s his money, his generosity and his deal. – MarketWatch illustration
Your obligation is to stick to the agreement you’re making with your father — not to your siblings. It is, after all, his money, his generosity and his deal. You accept the $250,000 and the strings that come attached or you reject it. Don’t tell your two siblings; they will find out soon enough (or not) when your father passes away and divides his estate.
Family secrets are far from ideal, and you don’t mention your mother so I assume she is either on board as well, or your parents are either divorced or she has passed away. It makes sense to put the money to good use now, as your house should increase in value.
Estate planning and gifting is complicated and some parents do so in an equitable, if not equal, manner. And that’s OK. It’s their choice. Different children will have different needs at different times, and you are fortunate that your father has the funds to help you at this critical time. Siblings often have too many agendas. Better not to poke the proverbial bears.
I recently received a letter from this reader whose father cut their six siblings out of his will. That’s a far more drastic and difficult situation than the one you race. Fortunately, it was a relatively modest sum of money ($150,000), at least as far as the Internal Revenue Service is concerned, so she had the option of splitting her inheritance after the fact.
Under IRS rules, the lifetime estate- and gift-tax exclusion for 2025 is $13.99 million (or $27.98 million for married couples). Your father can also give $19,000 per child per year (or $38,000 per year for married couples) without having to include the cash gift in his annual income-tax return to the IRS.
Extremely wealthy families will have to do some extra planning. Unless Congress acts, the “lifetime gift tax exclusion” will drop to $7.2 million in 2026 for an individual. The gift tax applies to the wealth transfer over your lifetime, and is paid by the donor, while the estate tax is levied on the estate of the deceased.
“After the exclusion, the U.S. estate tax rate is 40% of your estate’s value,” according to J.P. Morgan Private Bank JPM. “In addition, a dozen states levy their own estate taxes — the highest runs at around a 10% effective rate. Without proper planning, the drop in the exclusion amount will significantly increase wealthy taxpayers’ estate tax liabilities.”
“Lifetime gifting allows donors to transfer wealth to beneficiaries, to some extent without tax consequence,” it adds. “And if gifting is done properly, it also shrinks the giver’s taxable estate by removing future appreciation from the estate taxes later.” That equates to more for your family and your father’s charitable legacy. And, in theory, your two siblings.
I hope you find a nice place to live and, if you are willing to accept your father’s deal, you manage to keep your word and make sure that your siblings are kept out of the picture. Otherwise, it would cause unwanted and unnecessary family discord. As my late father used to say, “I can keep secrets, it’s the people I tell who can’t.”
The Moneyist regrets he cannot reply to questions individually.
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