Gift or Guilt? Navigating Family Money

Many Americans aren't waiting until they pass away to give money to their heirs. They're doing it now. Fifty-seven percent of high-net-worth retail investors plan to gift some amount of their assets in the next five years and 74% plan to do so over the course of their lifetime, according to a 2025 Charles Schwab High Net Worth Client Pulse Survey. When you're on the receiving end, that may sound great, but sometimes money gifts can come with strings—and guilt.

Conditional gifting, where a monetary gift is given with specific stipulations, is a common giving strategy. Almost 20% of gifts from parents to children will come with stipulations, according to the Schwab survey. But even if it's not explicitly expressed, the giver and the receiver may have very different ideas about what should be done with the money.

Dealing with money can be emotional in the best of circumstances. When it comes to giving and receiving money gifts, it can get even trickier. Because along with the gift, there may be certain unspoken expectations and a desire to convey values or influence behavior. Here are three hypothetical scenarios where there's a potential for misunderstanding on both sides.

Scenario 1: Money to buy a home. When parents are willing to gift their kids money to buy a house, it's a special opportunity for one generation to help the other establish roots and build wealth. But maybe you and your parents have very different ideas of where you should live or the type of house you should buy. Is the purchase contingent on their approval? If you buy something they dislike, will they express their disapproval every time they come over? This could be a real blow to family harmony.

Scenario 2: Gifting the annual exclusion to family members. The annual exclusion is the amount of money a person can give an individual in a year without incurring a gift tax. For 2025, that amount is $19,000 (adjusted for inflation every year). And that amount can be given to any number of people. While gifting the annual exclusion to family members is certainly generous, this can cause unexpected challenges.

Is the money being given for a specific reason, say to use for a particular education goal? Here's an example. Grandparents use the annual exclusion every year to fund a 529 plan for their granddaughter with the expectation that she'll go to their alma mater. But the granddaughter doesn't want to go to that school. The result is some very unhappy grandparents—and uncomfortable parents caught in the middle.

Then there's a potential equality issue when gifting to siblings. Parents may choose to give the annual exclusion to all their children, spouses, and grandchildren. But one daughter is single with no kids, and the other is married with two children. One daughter receives $19,000, while the other daughter and her family receive a total of $76,000. It hardly seems fair to the single daughter. She feels short-changed and starts to develop some underlying resentment toward her sister.

Also, it's important to set expectations. Will the annual exclusion be gifted every year? Is that gift dependent on how it's used? The receiver may not want to plan their finances based on an annual gift unless they know it will be recurring.

Scenario 3: Helping to pay off high-interest debt. A parent or relative helps a young adult pay off their credit card debt with the promise they won't run up further balances. Easier said than done. So, what does the giver do? Pass judgement every time they see that person buy something or go somewhere? Make an issue of it? Or just resolve not to be so generous in the future?

All these scenarios are ripe for misunderstanding—and guilt. Parents also may guilt kids by thinking they gave them money but now never see them. Kids may feel that if they want to keep getting money, they have to show up for Sunday dinner. That's not great for anyone, and it doesn't have to be that way.

There are several reasons someone may choose to share their wealth during their lifetime. Certainly, there are tax motivations. But the primary reason for respondents in the Schwab survey was to offer general financial support for family and to help with milestones like a wedding, home purchase, or starting a business.

To me, gifting often includes an element of wanting to pass down values and opinions. If you're the recipient, the question is—are they yours? The giver may have certain expectations of what you should do with the money and how you live your life. Can you live up to those expectations, and what might happen if you don't?

On the positive side, over half the parents who responded in the Schwab survey say they have discussed, or plan to discuss, the gifts in advance with their families. I think that's essential. To avoid conflict and guilt, you need to be honest and open about how your ideas regarding what to do with the money may differ. If there are too many strings attached, you can respectfully decline. You might say that while you appreciate the willingness to help, you're just really trying to do it on your own. Or that you think it would be detrimental to your relationship if you accept their conditions and then can't live up to them.

While gifting is a wonderful way for families to offer help and encouragement, it isn't always straightforward. Often, it's about more than passing down wealth—it's about passing down purpose. For the sake of family harmony, make sure your purposes are aligned before you give or accept.