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The Moneyist: ‘I feel incredibly guilty’: My sister is unemployed and my brother makes $40,000. Should I offer to match their 529 plan contributions for their kids?

Dear Quentin,

My wife and I currently make $250,000 a year, which will climb north of $500,000 in the next few years. I have a currently unemployed sister and a brother who makes $40,000 annually with three kids. We are all in our early to mid-30s.

When thinking 10 to 30 years down the road, I am concerned with their lack of retirement savings and inability to save for my niece’s and nephew’s college fees. I’m particularly concerned with how our family gatherings will feel. Will the relative extravagance create jealousy or animosity? Will they feel better about our huge gap in income if I make an effort to help them?

“‘Recently, my wife and I were talking about buying a $100,000 family SUV, while my brother was trying to buy a $5,000 car that needs mechanical work. I feel incredibly guilty.’”

Recently, my wife and I were talking about buying a $100,000 family SUV, while my brother was trying to buy a $5,000 car that needs mechanical work. I feel incredibly guilty that we will be well off, while our immediate family is struggling to make ends meet. However, I did work very hard to get where I am today as a physician.

The question I have for you: Is it a good idea to contribute to my sister’s and brother’s retirement and 529 accounts in an attempt to not only financially support them, but also encourage them to save money? My current plan is to “match” their contributions to a certain amount — sort of like an employer match — be it a retirement plan or 529 college savings plan.

Are my feelings illogical? Should I get over my guilt, or is this a sensible plan? I need an outside perspective.

Fortunate and Concerned Brother

Dear Fortunate and Concerned Brother,

Don’t give them money because you feel guilty — do it because you can do it, and because you want to help them.

I think both are true in your case, but if you embark on a journey to help your siblings plan for their future, it’s best to maintain emotionally healthy boundaries. Guilt does not lend itself to such a bargain. It may alter the dynamics of your relationship: There will be a power imbalance, and you should prepare yourself for that and be sensitive to the impact of your generosity.

You need to set goals for yourself, and hopefully your siblings can set their own investing goals. But you also need to set limits on how much you wish to give in any given year, and even over your lifetime. Your circumstances may change, and you want to encourage your brother and sister to be as self-sufficient as possible rather than depending on you as a fallback for any or all financial decisions they make.

The only way to ensure a 529 plan is used for the purpose it is intended is to set up the accounts yourself for your nieces and nephews. These accounts come in two forms: “prepaid college tuition plans” and “college savings plans.” You can read more about them here. Alternatively, custodialaccounts, opened under the Uniform Transfer to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA), are common vehicles for this purpose. 

There are also tax considerations to keep in mind: In 2022, the annual gift-tax exemption has risen to $16,000 per donor/recipient, an increase from $15,000 in 2021. Annual gifts are not deductible on your income taxes, nor are they regarded as income for the recipients. The lifetime gift-tax exemption rose to $12.06 million in 2022 from $11.7 million last year. Gifts made directly to a healthcare provider for a friend or relative and directly to an educational institution are exempt from gift tax.

In the meantime, you can help your brother buy a car. Rather than pay for the entire car up front, you could help him with the cost to buy a reliable set of wheels that will get him to and from work. It will give him agency over his own finances and prevent you from slipping into a parental (or Father Christmas) figure, where the expectation of help eclipses the motivation behind it — which is to help ensure that your siblings have peace of mind, and their families have a better future.

Yocan email The Moneyist with any financial and ethical questions related to coronavirus at, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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More from Quentin Fottrell:

• ‘We’ve been left out in the cold’: My mother named my sister beneficiary of her estate, but wrote a letter wishing to divide it among her 3 children. What now?
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• ‘She had a will, but it was null and void’: My friend and her sister are fighting over their mother’s life-insurance policy and bank account. Who should win out?

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