By Quentin Fottrell
'I am currently saving this money for him'
&#34;My son had no financial input into that property.&#34; (Photo subjects are models.)
Dear Quentin,
Instead of giving my son a portion of some rental property I own 50/50 with my daughter,  I promised to give him $250,000 instead as an inheritance before I die.  The reason was simple: my son had no financial input into that property,
I am currently saving this money for him. When the amount accrues to $250,000, including interest, do I give him that money or should he have the $250,000, plus whatever interest is paid? Obviously, I prefer the former scenario.
I'm desperately trying to do right by everyone. How do I make up for the equity in the property?
The Mother
Related: My father is giving me $250K to buy a home, but told me not to tell my two siblings. Am I morally obligated to tell them?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
You're a generous parent, not a Federal Reserve committee member or a Nobel Prize-winning economist; and certainly not a fortune teller.
Dear Mother,
It may never be entirely equal. Whatever you decide, put it in writing.
Your daughter invested in a house and, as you say, brought some of her own money. The house, given the long-term trajectory of the housing market, will increase in value. Your son has an opportunity to invest this $250,000 in the stock market or, perhaps, use it as seed money to buy a property of his own.
If you want to make sure each child gets exactly the same inheritance, down to the last red cent, you could give him the monetary equivalent of your share of the rental property, and allow your daughter to own the home outright. Forcing your daughter into becoming a joint landlord with her brother against her wishes and/or without her knowledge would be a weird flex, if you can afford to give your son the cash equivalent.
The clue is in your question: If the agreement was &#34;I will give you $250,000...&#34; then you should indeed gift him $250,000, with no additional interest on top. The interest is simply a method for you to accumulate the pledged amount. You are not functioning as a bank, and unless you promised him interest, he is not entitled to any. Ultimately, you want to ensure that they each receive a similar gift and/or inheritance.
My only concern is that you set aside enough money for your own retirement, which should include an emergency fund.
Imagine you had entered into this real-estate transaction in 2009 and gifted your son $250,000. He would have made out like a bandit, given the fall in property prices, which took the best part of a decade to recover. You're a generous parent, not a Federal Reserve committee member or a Nobel Prize-winning economist - and certainly not a fortune teller. Sometimes, non-cash inheritances leave a lot up to chance.
To equalize inheritance later, you can simply adjust the distribution in your will or trust, reducing your son and daughter's shares by the amount you have gifted each. A &#34;hotchpot clause&#34; in your will ensures fairness by effectively deducting the advanced gifts from their inheritance share, retroactively calculating what each heir has already received and helping to ensure that everyone gets an equal amount.
&#34;It also has a basis in the doctrine of satisfaction - the assumption that a parent would not want to benefit one child twice at the expense of the others,&#34; according to the Society of Will Writers. &#34;A hotchpot clause is not asking for the gift to be repaid to the testator's estate. It is merely recognizing its existence so that the beneficiary's share in the estate can be reduced and the end result is that all children have received the same benefit overall.&#34;
My only concern is that you have enough money set aside for your retirement, which should include  an emergency fund for at least six months of expenses. (Some financial experts also suggest having up to five years of a &#34;just-in-case&#34; fund in retirement so you have enough reserves during an economic downturn and stock market crash.
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Tax implications
Given that you have to save to give your son $250,000 raises an amber-to-red flag for me. Never compromise your own financial security for a promised gift or inheritance during your lifetime. Talk to your estate-planning attorney and accountant about your current assets - which include your primary home - and your future needs in retirement. That could include long-term care or other unforeseen medical or house-related expenses.
Under Internal Revenue Service rules, the lifetime estate- and gift-tax exclusion for 2025 is $13.99 million (or $27.98 million for married couples). You can also give $19,000 per child per year (or $38,000 per year for married couples) without having to include the cash gift in his annual income-tax return to the IRS.
The gift tax applies to the wealth transfer over your lifetime and is paid by the donor; estate tax is levied on the estate of the deceased. Earlier this year, Congress enacted the One Big Beautiful Bill Act, which increased the basic gift-exclusion amount. Starting in 2026, the lifetime exclusion per person will be $15 million or $30 million for married couples.
It's best to overshare with the IRS. A gift tax applies to the wealth transfer over your lifetime and is paid by the donor.
It's best to overshare with the IRS. &#34;The gift return is an informational return because there is a lot of information and no tax being sent to the IRS,&#34; says LSL CPAs, which is headquartered in Irvine, Ca. &#34;Because the IRS asks for enough information to be sent to 'adequately disclose' the gift, we usually advise our clients to err on the side of too much information.&#34;
&#34;If you do not give the IRS enough information, they may decide to revalue the gift in 5, 10, or 20 years down the road,&#34; LSL adds. &#34;Have your estate attorney communicate with your CPA. Your CPA knows what you own and the tax implications of specific actions. Your estate attorney knows where you want your assets to go and the legal implications of certain actions.&#34;
Giving your children a &#34;living inheritance&#34; can help them reach goals. If your son wanted to get on the property ladder, this $250,000 could make a big difference. From an estate-tax perspective, it makes precious little difference if your estate is not big enough to be subject to estate taxes. Just be mindful of unconscious bias towards one child over another.
Happily, that is clearly something that is of concern to you.
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Previous columns by Quentin Fottrell:
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'It's expensive feeding and housing a family of 7': I'm 41 with $46K in credit-card debt. Do I raid my $1.2 million IRAs?
Does my friend have a right to her late father's multimillion-dollar real-estate empire? His widow claims they're mired in debt.
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-Quentin Fottrell
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12-08-25 0511ET

<p>A mother plans to give her son $250,000 instead of a share in a rental property co-owned with her daughter. She seeks advice on whether to include interest in the gift and how to ensure fairness in inheritance. Suggestions include adjusting the will with a hotchpot clause to equalize gifts and ensuring her own financial security before gifting.</p>

'I'm desperately trying to do right by everyone': I'm giving my son $250K and my daughter 50% of a rental we co-own. Is that fair?