4 meaningful ways to give money as a wedding gift

There are more ways to invest in a couple’s new life together than handing over cash.

Buying a gift off the registry may be the easiest choice for most wedding guests. But when someone very special in your life gets married—be it your child, grandchild, another close relative or friend—a set of bath towels or a vacuum cleaner may not hit the desired note.
 
If you have your heart set on helping the happy couple financially, consider these gifts—and the smartest ways to give them.
 
The average wedding guest spent around $120 on a gift in 2019, while a guest who was a closer friend or family member spent $130.

1. Help with buying a home

Gifting the newlyweds a down payment is a generous way to help them start a new chapter together. However, large gifts over a certain amount are taxable to the giver, so it’s important to understand the tax implications, says Jim Alverson, Director of Wealth Planning Strategies for TIAA.
 
“There is a gifting exclusionary exemption amount in the tax code where no tax filing is required for making a gift of $15,000 or less per person per year,” Alverson says. “That means two parents could give one person $30,000 or give a couple $60,000.”
 
If you want to give more, you’ll need to file a gift tax form with your federal tax return disclosing the amount in excess of the $15,000 per person threshold.
 
It’s also worth noting, that amount would dip into your federal estate tax exemption, which is $11.7 million dollars for the 2021 tax year, Alverson says. For example, if you have $100,000 to disclose on the gift tax form, that would decrease your available exemption from $11.7 million to $11.6 million. “So, for most people, there’s no issue going above the $15,000, provided they can afford to,” he says.
 
Record-keeping is important, because when it’s time for the newlyweds to secure their mortgage, their lender may require a signed gift letter. Exactly what details need to be documented may differ from lender to lender, but the letter generally affirms that the money provided for the down payment is a gift and doesn’t need to be repaid.
 

2. Handing over the family home

If you’re downsizing or looking to move, gifting or selling the newlyweds your home is another way to help them jumpstart their life together.
 
“If [parents] just give the house to the kids, the fair market value on the date of the gift is the value of the gift. And the basis transfers over as well for the purpose of selling the house. [You] can absolutely do that, and it’s not uncommon,” Alverson says.
 
Similarly, “selling a house [to a relative] for significantly below market value is considered a gift—you are gifting a portion of the value,” he says. “If [parents] had a $300,000 house that they sold for $200,000 to their kids, they made a $100,000 gift, and they’d have to disclose that [on their tax return],” Alverson says.
 

3. Giving investments as gifts

Seeding the couple’s nest egg with investments can be especially meaningful since your gift will have the potential to grow over the course of their marriage. If you give a share of stock, keep in mind that your basis in that stock transfers over to the recipient, Alverson says. “Sometimes people have highly appreciated shares they want to gift,” he says. “That’s fine to do; just remember that the basis goes over, so if [the couple] sells that stock, they could have to pay capital gains taxes.”
 

4. The gift of travel

Funding a honeymoon (in part or in full) has become an even more popular wedding gift as some marrying couples prioritize experiences over things. For tax purposes, the giver would treat it the same as gifting a large sum of cash (see “Help with buying a home,” above). “And unless you’re inclined to spend more than $15,000 on a honeymoon, it’s probably under that exemption amount in the tax code,” Alverson says.
 
Many couples make it easy by setting up a honeymoon registry provided by websites such as Zola and Honeyfund. These services allow you to team up with other wedding guests to contribute funds toward airline tickets, hotel stays and excursions in the couple’s desired destination.

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.
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