Personal Finance

My wife and I are financially secure - how high does one's net worth need to be to start gifting money to family and friends?

Maurie Backman

Published: January 24, 2025 1:12 pm

A lot of people have the mindset that there’s no such thing as having too much money. So I found it really refreshing to come across this Reddit post. Here, we have a couple that’s happy with their net worth and is considering gifting some of their money to family and friends.

It’s certainly a good position to be in. But I’d encourage the poster above — and anyone else in a similar situation — to proceed with caution.

There’s no preset number

When it comes to being in a position to start giving money away, there’s no specific number you have to reach first. That really depends on you.

It may be that once you’ve accumulated $5 million, you’re confident you have more than enough to meet your needs for the rest of your life. But another couple might need $10 million to feel the same, and neither of you is wrong versus right. It’s a matter of your specific situation.

You always need to be prepared

Being happy and secure with the amount of wealth you’ve accumulated is a great place to be. And wanting to share that wealth with the people you care about is such a respectable thing to do. But before you start making plans to give your money away, it’s important to make sure your personal needs are truly covered.

One aspect of aging some people tend to overlook is long-term care. Studies show that 70% of people who make it to age 65 end up needing long-term care. And the costs there could be astronomical.

Genworth puts the average annual cost of a private nursing home room at about $117,000. But that’s just an average. And depending on your needs and location, it could be more. So as a couple, it’s not out of the question that you might end up needing to spend around $250,000 a year on long-term at some point in life.

You might also have other things you just plain want to do with your money later in life, like start a charitable foundation to both do good and stay busy. So you’ll need to be careful not to gift away too much of your wealth earlier on.

It’s best to consult a professional

You’d think that if you earned money and paid taxes on it, you’d then have the right to give it away as you please. But unfortunately, gift tax liabilities can come into play if you give away too much of your money in too short a time frame. That’s why your best bet is to consult with a financial advisor in a situation like this.

An advisor can help out in a couple of ways. First, they can help you figure out how much of your money you’re safe to give away in gift form. And secondly, they can help you find the most tax-advantaged avenues to accomplish that goal. In fact, you may want to assemble a financial planning team that includes an advisor as well as an estate-planning attorney so you’re covered on all angles.