How to give a gift of thousand dollars to a 5 year old.?

Question

Hi,

My niece is turning 5 years old and I want to give her a gift of 2 thousand dollars for her birthday. What is the best way of giving her 2 thousand dollars (other than in the form of cash)? I want her parents to be able to cash the gift whenever they want , at any time, with the least amount of hassle and spend the money for whatever my niece may need. is opening a bank account or buying savings bonds a good option.? are there any other options? never done this before, so would appreciate some ideas.

Thank you,

Answer 1

I would suggest writing a check for that amount to the parents, with the impression being it is for the niece.  However, two thousand dollars is too much for a five year old to understand or spend.  I suggest a smaller amount directly for the child and for the rest to go to her college fund.

Answer 2

i wish i was your niece

Answer 3

i think  you should open a bank account in her name so her parents can take out the money if they want or add to it to save up for college or something cause savings bonds they cant touch till there 18

Answer 4

Yeah, I was just going to say put it in the form of a savings bond, I was given savings bonds every easter when I was a child, and now that I can cash them in starting next year, they will definately come in handy ;D

Answer 5

There are a number of ways to do that.  

Your niece can open bank account or brokerage account where you can deposit the money, start a CD, mutual fund, bond etc.  Because she is still a minor, her parent(s) has to be on the account.

A better alternative is to start an education fund like 529 or Coverdell in her name.  She can use the money toward education without being taxed.  That means all the earning for the next decade or so is tax free.  Some states allow tax deduction for contribution to a instate plan, management fee and investment options varies.  Go to http://www.independent529plan.org/ for more information

Best wishes.

Answer 6

If you want the parents to be able to use the money at any time, just give them a check.  However, by giving them instant access (whatever the method), you will be allowing them to use the money for anything, not just your niece's needs.  You are trusting them to follow your wishes but you cannot force them to.  To restrict them to only using the funds for your niece's needs, you will have to restrict their access.

Answer 7

I think you should open up a bank account for her, especially if you do not trust the parents with the money.  You can also ration the money out from the account as well and monitor the spending.  It's great that you have a big heart to give like that!

Answer 8

Give her $40- take her to the bank to have her open a savings account with $20 of it and get to spend the other $20.  This way you teach her about saving money.

Put the other $960 in a college savings plan. (this will also encourage talk about college later down the road)

Give her parents the other $1000 for her needs.

Answer 9

Savings bond or something that'll mature until she's old enough (college fund)