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Valentine's Present With a Future |
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Reprinted with permission of Investment Representative Celine Richardson of EdwardJones
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Friday, 08 February 2008 |
 Any Valentine's Day gift is thoughtful. Still, most of these presents
have fairly short shelf lives - flowers fade, chocolates get eaten
and those little candy hearts that say "Be Mine" get stale. This
year, why not give your special valentine a gift that keeps on giving
for years to come?
Specifically, consider making a financial gift. Here are a few
possibilities:
- Give stocks. You might want to give shares of stock in a company
that makes products favored by your loved one. As an alternative
to buying stocks, you could give some shares of your own. You'll
need to know what you originally paid for the stock (its tax
basis), how long you've held it and its fair market value at
the date of the gift. The recipient will need this information
to determine gains or losses when he or she sells the stock.
(You'll also need to determine if you have to pay gift taxes.
You can give up to $12,000 per year, free of gift taxes, to
as many people as you want.)
- Contribute to an IRA. The IRA contribution limit for 2008
is $5,000. Investors who are 50 or older can also make a "catch-up"
contribution of an additional $1,000. So, if your valentine
hasn't fully funded his or hers IRA for this year, you can help.
Because of their tax advantages, IRAs are great retirement-savings
vehicles. (Traditional IRAs have the potential to grow tax-deferred;
Roth IRAs potentially grow tax-free, provided the investor has
had the account for at least five years and is 59-1/2 or older.)
- Make a charitable gift in your valentine's name. Your loved
one, like most people, probably supports a variety of social
and charitable organizations. By making a donation to one of
these groups in your valentine's name, you can add a special
meaning to this Valentine's Day. At the same time, you'll be
giving yourself a little valentine, because you may be able
to claim a tax deduction for your charitable gift.
- Review your estate plans. All right, it doesn't sound all
that romantic - but if your sweetheart is also your spouse,
you'll certainly be looking out for his or her best interests
when you review your estate plans. If you were to die without
a will, for example, you would cause considerable anguish to
your survivors. And in many cases, a simple will isn't enough
- you may need to establish a living trust or other estate-planning
tool. You'll also want to go through your financial assets -including
your IRA, 401(k), annuities and life insurance contracts - to
make sure your beneficiary designations are still accurate.
Beneficiary designations supersede whatever instructions may
be in your will, so it's essential that you update your beneficiaries
whenever your family situation changes. It's not uncommon for
assets to go to the "wrong beneficiaries" (e.g., spouses from
earlier marriages) or to bypass children born after the initial
beneficiary designation was made.
By making any of these gifts, you'll show your loved one that you
really care - and the results of your generosity will be felt long
after Valentine's Day is over.
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