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The Do's & Don'ts of Gift-Giving
Dear Jeff:
I have accumulated a nice portfolio of Baby Bell stocks that I acquired when the Bell company was broken into parts. I would like to pass these stocks to my 10 grandchildren, to help fund their college study. What is the safest and most effective way to give these stocks equally to my 10 grandchildren? Any info is greatly appreciated.
Jeff Says:
Gifting during your lifetime is very easy. Just give each one of your grandchildren the same number of stocks now. They will not have to pay income taxes on your gift and you will not have a gift tax as long as each grandchild receives $10,000 or less ($20,000 if you and your wife can make gifts to them) each year.
If your stock is held in an account with a brokerage firm, then contact your broker and have him make the arrangements to issue stock certificates to your grandchildren. If you hold the stock certificates, then consider working with a broker to have them transferred to your grandchildren. Read my previous columns on gifting stock and taxes on gifts for more information.
If you want to leave your grandchildren more at your death, then you must specify your intentions in your will. You can leave a specific number of shares to each beneficiary, or you can direct your personal representative to distribute them in the fashion that you envision. Have an attorney prepare the document for you to be sure that it is done right. After all, you did ask for the safest way.
For more information on estate planning, see our Financial Basics.
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