Gift-Giving Guidelines for Grandparents

By: Kevin-Barry Henry, #1 Bestselling Author

My Dad told me the best part of having children is having grandchildren and that they are the reward for not killing his own children. He also says that an hour with your grandkids will make you feel 30 years younger but any longer than an hour can start to add years to his present age.

Speaking of presents, what are appropriate gift-giving guidelines for grandparents? Grandparents usually enjoy a different financial situation in their retired years and that can sometimes cause them to be overly generous.

It can be easy to spoil your grandkids, because that is part of the joy of being a grandparent after all! Giving them cookies before supper and gummy-bears for lunch is one thing, but when it comes to the non-edible gifts, be careful not to overdo it with your generosity.

One of the easiest things to do for grandchildren around the holidays is show them how much you love them with an enormous gift haul that will demonstrate the depth of your devotion, but a little caution and self-restraint might be a good idea. It doesn’t mean you can’t get them what they want, but a little digging might help everyone involved enjoy your gift a little more.

Know what they like

Be sure you ask your grandchildren (or their parents) what they would like or need. Getting your grandchild the perfect gift in your mind might not mean that your grandchild will agree with you. It would be hard to force your grandchildren to play with a toy you think is great but that your grandchildren don’t like, and it might just be a waste.

Keep in mind that your grandchildren might have two sets of grandparents and in some cases two great-grandparents so there might be many gifts. In some cases, the children’s parents would like to politely remind the grandparents that more “stuff” can be not only too generous, but also brings logistical issues regarding space at home and possibly travel back home.

Spend time in their company

An interesting idea might be spending your time (and money) on them with a day out. Take them to their favourite restaurant for an afternoon lunch and let them order what they please. Maybe stop in at a mall and do a little shopping at their favourite stores.

You can do this one on one without their parents or their brothers or sisters. This will give you private time together with them and a fun afternoon in each others’ company. You can even make it a tradition every year or every holiday and gives you both something to look forward to.

How much is too much?

What if grandparents just prefer plain old cash? You can’t go wrong with cash, right? I think there are two points to consider when you opt to gift your children money rather than gifts. How much is appropriate to give them and what they will do with it. According to a recent article in the Wall Street Journal, Grandparents in the US are generous when it comes to presents and I can only assume that granparents here in Canada are on par with our neighbors to the south.

The NPD Group, a US consumer analytics firm, did a report on Grandparents spending (in the US), and they found that gifts are the top category of consumer spending by grandparents, according to an AARP survey to be released next year.

“On average, grandparents in Oklahoma shelled out the most—$339 per grandchild—on holiday gifts, with Connecticut and Washington, D.C., coming in second and third according to online lender OppLoans which surveyed 1,700 grandparents in 50 states.”

Unlike in US however, in Canada we don’t have a gift tax here (subject to reasonable amounts of course, talk to your advisor if you suspect your gift giving habits may be approaching a threshold). What happens to the money after you give it to them may, however be of interest to Canada Revenue Agency, so be advised.

RESPs

One of the best and most efficient ways to gift money to your grandchildren is to contribute to a Registered Education Savings Plan (RESP) for their future education needs. There is no tax implications for the children, the parents or the grandparents to have to worry about and the gift not only appreciates on a tax-deferred basis, but the child will also benefit from the child education savings grant (CESG) which adds 20% ($500 maximum annual grant) per child per year. Add that up over 16-18 years and you might be surprised to find out how much money your holiday or birthday gifts of money will have grown to!

The maximum lifetime grant available per child is $7,200 and all that the grandparents have do is to make contributions to their grandchild’s RESP. It is great way to plan for the child’s future.

But, you can’t play with a college fund.

There is no doubt that the gift giving puzzle can be a messy one, according to Jay Remer, an etiquette consultant and columnist for the Telegraph Journal in New Brunswick. A reader of his advice column for that paper once wrote him with a question regarding in-laws who came to visit and often brought too many gifts for the kids.

The reader wondered if it would be appropriate to suggest money for a college fund instead. His advice: Show gratitude, set boundaries and skip the college fund, which is a nice idea but not warm and fuzzy.

Mr. Remer also cautions that people should be wary of trying to live up to a certain standard and be careful to avoid trying to compete with the other grandparents.

Check with the parents

It is also a good idea to consult with the parents before you shop. Checking with the parents could give you a good idea of what is needed or allowed. It is also a sign of respect that they will probably appreciate. You might also find out that there is a gift that the children want that is a little expensive and possibly out of reach for the parents right now, and that might be a nice opportunity for the grandparents, assuming the parents are ok with it. If the grandparents can provide something the child really wants, then that will presumably be very satisfying for all involved.

At the end of the day, grandparents will do what they want to, and I am sure the grandchildren will appreciate it all the more.

As my Dad says about his grandkids, “they are the only ones that still love hearing all of my stories!” As his son, who has heard all of his stories, I know firsthand (and second hand) what a lucky gift they are all in for.

With Gratitude,

Kevin-Barry Henry

THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.