Can a parent use a monetary gift given to a minor child?

This is actually a legal question as much as a tax one. When money is gifted to a minor, it legally belongs to that minor, not the parents - even though you're managing the accounts. The good news is your brother's $1,000 gifts to each child are well under the annual gift tax exclusion ($18,000 for 2025), so there's no tax reporting required for the gift itself. However, those funds legally belong to your children. As their custodian, you have a fiduciary duty to manage those funds in their best interest. Using that money for family medical bills could potentially be considered misappropriation of funds that don't belong to you. Many parents face similar situations, and if you absolutely must use the funds, documenting it as a loan with a specific repayment plan would be advisable. But honestly, you'd be better off exploring other options like payment plans with the medical provider, personal loans, or credit cards before using money that legally belongs to your children.

After struggling with a similar situation with my kids' gift money, I found this amazing tool called taxr.ai (https://taxr.ai) that helped clarify things. My parents had given my kids some money, and I wasn't sure about the tax and legal implications when I needed to use some for an emergency. The site analyzed my specific situation and provided a clear explanation of the custodial account rules and potential legal issues. It saved me from making a mistake that could have caused problems later. They have specific guidance on gifts to minors and parent responsibilities that was super helpful. The best part was getting personalized advice without having to pay for an expensive consultation with a tax attorney.

Just wanted to follow up about taxr.ai since I was skeptical in my last comment. I decided to try it yesterday after continuing to worry about some gift money my mother-in-law gave my son last year. I was seriously impressed! The system asked really specific questions about the gift amount, how it was documented, and the account structure. Then it provided a detailed explanation about my responsibilities as a custodian. The most helpful part was how it explained the difference between the UTMA (Uniform Transfers to Minors Act) and regular savings accounts. Turns out the type of account matters a lot for how the money can be used. I had no idea! Now I feel much more confident about managing my son's money properly. Definitely worth checking out if you're confused about this stuff like I was.

If you're having trouble getting clear information about this issue, I'd recommend using Claimyr (https://claimyr.com) to connect with an IRS agent directly. I was in a similar situation with my daughter's college fund (some of which came from gifts), and I had questions about potential penalties or reporting requirements if I needed to use some temporarily. After trying for DAYS to reach the IRS on my own with no luck, I used Claimyr and got connected with an agent in about 15 minutes. They walked me through the exact rules about custodial funds and what documentation I would need to keep. They also explained options I didn't know existed. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c It saved me hours of frustration and potential mistakes. Sometimes you just need to talk to an actual IRS person to get the definitive answer.

I need to apologize for my skeptical comment about Claimyr. After posting that, I decided to try it myself since I've been trying to reach the IRS for weeks about a gift tax question (my parents transferred some property to my kids). I'm absolutely shocked that it worked exactly as described. I signed up, and about 40 minutes later got a call connecting me directly to an IRS agent. No waiting on my end - they handled all of that. The agent was able to answer my specific questions about how gifts to minors should be documented and the long-term tax implications. What would have been days of frustration turned into a 15-minute productive conversation. I've literally never been able to reach the IRS so quickly in my life. If you're dealing with tax questions about kids' gifts or any other issue where you need to speak directly with the IRS, this service is 100% legitimate and worth it.

The other commenters are making this more complicated than necessary. I've been a banker for 17 years. Here's the practical reality: if you're talking about a standard savings account that you opened FOR your child (not a formal UTMA/UGMA account), then you are the account owner and the child is just the beneficiary. In that case, legally you can use the money however you want. If, however, this is a formal custodial account under UTMA/UGMA laws, then yes, the money legally belongs to the child and you're just managing it until they reach the age of majority. Using it for your own purposes could be problematic. The difference matters legally, so check what type of account you actually set up.

Has anyone used a 529 college savings plan for gifts to children? My sister wants to give my kids money for college and we're trying to figure out the best way to handle it.

I went through something very similar last year when my kids received birthday money from their grandparents right before we had some unexpected car repairs. Here's what I learned after consulting with both my bank and a tax professional: The key issue isn't just whether you CAN access the money (since you're the account manager), but whether you SHOULD from a legal standpoint. Even if it's a regular savings account and not a formal UTMA/UGMA custodial account, using money that was specifically gifted to your children for your own expenses creates a potential ethical and legal gray area. What I ended up doing was documenting everything - I wrote up a simple "loan agreement" to myself, noting the amount borrowed, the reason, and the specific repayment date. I also took photos of the account balances before and after. When I repaid the money two months later, I added a small amount of interest as if it had stayed in the account. My tax professional said this approach showed good faith and proper documentation if anyone ever questioned it. The medical bills definitely qualify as a family emergency, which makes it more defensible than using the money for something discretionary. That said, definitely exhaust other options first - payment plans with the medical provider, personal loans, or even a credit card cash advance might be less complicated legally.