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Gift-Giving For Tax Advantages And Income For Life

By Edited Jun 30, 2015 2 4
As grandparents we sometimes find it easier slipping cash, check, or gift card into an envelope, and sending it off for birthdays, Christmas, baby showers, bridal showers and the like.  I am guilty of this as my grandchildren are in California, I am in Florida.
I ran across an article the other day in our AARP Bulletin that has some very good, gift - giving ideas.
Help Fund Your Children's Higher Education
You can start a 529 college savings plan in your name, For a grandchild, child, godchild, niece or nephew, with your child of choice as beneficiary.  You can invest as little as $15. or $25. a month in various types of mutual funds, for long-term growth.  Your child/grandchild gets the money tax-free for higher education.  And if you live in a state that has an income tax, you may be able to deduct part or all of your gift on your state tax return.
Money that is in a grandparents 529 is not counted on a federal college aid form, in the first year it won't reduce any government aid the child qualifies for.  And in subsequent years, withdrawals from the plan count as student resources.  This may reduce aid, but cash from your 529 leaves the student better off.  A 529 plan is run by the state.  Buy from the state directly, this will keep your cost down.  Using a financial adviser will cost you.
For a much safer choice, you might consider a Series I savings bond, (inflation-adjusted).  These are online at TreasuryDirect.gov.  As with other safe investments, they are low payers today, only earning an annualized rate of 2.2 percent.  But rates change every six months and increase if the inflation rises.  I-bond proceeds can be tax-free if used for tuition.  However for this to work, the bonds must be bought in the name of the child's parent (not the grandparent).  So give the money to a parent and let them make the purchase.

Charity Gift Giving That Pays You Income For Life

 If you make a charity gift of $5,000. and up, you get an instant tax deduction.  But if you donate appreciated stock, you avoid a capital gains tax.  The charity pays you an income for life.  And when you die, the charity gets whatever money is left.  Charities do the legal work at no cost to you, and many arrangements are possible.  The two most popular are gift annuities and remainder trust.
A charitable remainder trust works a bit differently.  The charity of your choice invests your gift, and you generally receive a fixed percentage of the assets in the trust every year.  Payouts will vary, depending on how the investments perform.
Most major nonprofits offer tax-favorable gifting opportunities, churches, schools, hospitals, disease-based organizations and local community foundations.  If your pocketbook can handle this kind of generosity, these are very good idea's.


Jan 31, 2013 5:37am
Your article has some very good and precise tips. Thumbs up!
Jan 31, 2013 5:44am
Thanks askformore on the comment, and thumbs up.
Jan 31, 2013 11:55am
Hi--I think your article offers some smaert advice and insights. I personally believe tha tnon-ffamily (extra) cash should be given directly to the poor so it is not diluted and stolen by the non-profit's system. Nevertheless, your article is sound and so two thumbs up from me and a rating
Feb 1, 2013 4:46am
Thank you Marlando for your comment. Your advice of giving to the poor instead, "a good idea." I appreciate your thumbs up & rating.
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