Gift Stock Yields Better Returns Than Gift Checks

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When thinking of giving a gift, most people immediately consider writing a check, giving a gift card to a favorite restaurant, or ordering something online.

However, from a financial planning perspective, this is a very inefficient method of giving. Unfortunately, the method that gets you the biggest bang for your buck is usually the most complex, impersonal and inconvenient, as is often the case in financial planning.

Let’s take a look at a few ways to get a little more “bang for your buck” with a gift.

Consider what the alternatives to giving cash might be. It is pretty hard to think of ways to give a gift without using cash.

One way to do so is to gift stock, preferably appreciated stock. It is very common for the individual giving (grantor) to be in a higher tax bracket than the individual receiving the gift (grantee). For this reason, the grantor is able to give more to the grantee because they don’t have to sell the stock, pay the taxes, then give the cash. To make the situation even better, the grantee may not even have to pay taxes when they sell the stock, if they are in the 0% to 15% tax bracket. This isn’t your traditional heart-warming gift from Grandmother, but the tax savings sure are heart-warming to me.

Another play on the same technique is to gift appreciated stock to young children in a custodial account. This allows either the grantor or a parent to act as a custodian over the account until the child reaches age 18 or 21, depending on state law. Appreciated stock can be directed into this account and sold over time with minimal tax consequences. However, you have to be aware of the “Kiddie Tax” for unearned income over $2,000 attributed to the child. Any amount over $2,000 is then taxed at the parents’ highest tax bracket! To extend this gifting strategy, cash produced by dividends and sales from this account can be transferred to a 529 savings plan in the name of the beneficiary. Just don’t forget to give the child something useful or fun at the same time.

Although these techniques are not as easy and straightforward as writing that check, there are some significant tax savings available for those who choose to use them. For individuals who are trying to play catch up on funding 529 plans or gifting to children or grandchildren, the annual gifting limit is $14,000 per year per person for 2014 and 2015.

Daniel Johnson, III CFP®

Financial Advisor


Giving Away Your Cake (and eating it too), AKA Charitable Remainder Trusts

ImageOne of the first recorded instances of the age old phrase “a man can not have his cake and eat it too” was written from Thomas, Duke of Norfolk to Thomas Cromwell, speaking about how the construction of Kenninghall had cut deeply into his finances. Today, we use this phrase when considering saving something of value, or giving it up for consumption. When thinking about our own personal assets, we have many choices. We have the opportunity to hold on to them (having our cake), swap them out (trading for a different cake), or selling them and buying a consumable asset (eating the cake).

With responsible planning for the future, the size of your portfolio should grow through the years. At the point of retirement for someone, a combination of pension, social security, and portfolio income may be able to provide for all of their expenses. This is a fantastic place to be in as a retiree. A dependable cash flow can empower gifting to the extent that the cash flow remains intact.

A few months ago, I wrote about Charitable Remainder Trusts here. For a retiree that has an excess income stream from investments, a Charitable Remainder Trust (CRT) can provide a certain and continued stream of income from donated property.  As the name suggests, a charity will inherit the property held in the trust when the beneficiaries pass away, just as it would if you left the property to a charity in your will. However, the additional benefit of a CRT is the income tax deduction received for giving the property occurs immediately. As a beneficiary you retain an income interest.

Give thought to the idea of giving some of your cake away now. There are many great non-profits and charities that will thank you. Now, I know all this talk of cake has really gotten that sweet tooth going, so feel free to eat some cake now too!

Dirty Laundry

Don Henley’s song “Dirty Laundry” came to mind as I watched a news clip recently. A reporter interviewed an elderly lady in Moore, Oklahoma. Standing in front of a pile of debris, the lady recounted the moments when the tornado destroyed her home. She told of sitting on a stool with her dog in her lap. She was tossed about and did not know where her dog was. She just hoped he was still alive.

At that moment, the reporter heard the dog and pointed to a nearby pile of rubble. The elderly lady immediately began lifting pieces of debris. The reporter and camera person just stood there. The lady pleaded for help. The reporter finally came to her aid and helped free the little dog. The microphone appears on the left side of the shot. Oh, we do not want to miss a single sound of this event.

Why did it take a desperate plea before the reporter helped this poor woman? She should have jumped in there with the lady and lifted the debris. Have we lost all sense of humanity and compassion?

In recent blog posts and newsletter articles, several of us here at Parsec have talked about the need to take care of physical and mental health through exercise, a healthy lifestyle, and community involvement. Life cannot be solely about your investment portfolio. Yes, you need money to survive. Selecting an appropriate asset allocation and developing an investment plan are important. In my opinion, focusing solely on your investment portfolio will not give you the balanced life that you need. As the saying goes, you cannot take it with you when you die.

As you have probably heard, the American Red Cross is accepting donations for the victims of the tornado. Their website is If you are able to donate to them or the charity of your choice, I am sure your assistance would be appreciated.

It is so easy to lose focus in the daily grind of life. Let’s try to keep some prospective and help each other when we can.

Cristy Freeman, AAMS
Senior Operations Associate

Parsec Supports Brother Wolf Animal Rescue

In this quarter’s newsletter, I talked about volunteering.  We all have a passion for something – helping homeless people, caring for the elderly, providing financial education, et cetera.  My cause is animal rescue. 

I mentioned that some of us at Parsec set up a fundraising team for Brother Wolf’s 4th annual “Run for the Paws.”  Our team, Hoofin’ for Woofin’, raised $1,275 for the no-kill shelter.  Several people here have pets.  The majority of them are rescues, so we received almost all of our donations from folks here at Parsec. 

Held this past Sunday, the event itself brought in over $15,000.  Brother Wolf will use the funds to provide medical care, food, and shelter for hundreds of animals at the shelter or in foster homes. 

Our mascot, Quinn.

Our mascot, Quinn.

Misty Cardone, her husband Phil, their dog Quinn, Laura Greene, and I participated in the one-mile walk along with lots of other walkers and their dogs.  Barbara Gray and her Yorkie, Brianna, cheered us on from the sidelines.  

Our cheerleader Brianna

Our cheerleader Brianna

The weather was beautiful.  We finally had a warm, sunny day instead of the persistent gloom and cold we have endured all winter.

Our involvement with the shelter does not end with “Run for the Paws.”  For the second year, we are sponsoring Brother Wolf’s Critter Camp.  Children will learn about animal care, pet behavior, pet training, and animal rescue.  In my opinion, teaching children to be caring and compassionate to animals makes them better human beings. 

I encourage all of you to consider what inspires you and get involved in your community.  As I said in the newsletter article, volunteering may not lead to higher portfolio returns or increased financial worth.  It can provide you with personal satisfaction, something money cannot buy.

Cristy Freeman, AAMS
Senior Operations Associate