**Please do not act on this topic without discussing with me. Everyone’s situations are different, and this may not be right for everyone.
In this situation, one idea is to open an UTMA for your kid (your kid is the beneficiary today and becomes the owner when they turn 21). Why is this? UTMA accounts are taxed favorably; $1,050 in gains are tax free a year while the next $1,050 are taxed at the kid’s rate (typically 0-10%). Transferring highly appreciated stock in-kind to an UTMA can eliminate the tax consequences of that stock by selling tactically every year.
** Yearly limits are subject to change
Downside:
- You are irrevocably gifting your child assets
- You may complicate financial aid for college
- UTMA’s often time clash with 529 in one’s financial planning
