Making a financial gift during this holiday season is more than a generous gesture to a loved one. It can also be a very powerful planning strategy.

The Wall Street Journal recently published a timely article on four financial gifts to consider. We agree with the article, but we would like to make one addition to the list.

The WSJ’s suggestions:

1. Buy time with an advisor

New graduates, parents of newborns, and those near retirement can all benefit from a consultation with a financial advisor who can help them assess their current financial situation and set goals. You might also consider  hiring “time” with me for a consultation with relatives, as a gift.

2. Help fund college

Contributing to a student’s 529 college savings account helps a young person considerably. Any contributions grow tax-deferred and withdrawals are tax-free for qualified college costs. You can contribute up to $14,000 annually without triggering the federal gift tax. Additionally, you can contribute up to five years’ worth of gifts at once. For example, you can put as much as $70,000 into a child’s 529 account this year, but you would be unable to make gifts to the same child for the next five years without triggering the gift tax.

3. Pay big bills

You can also offer to pay some or all of a loved one’s out-of-pocket medical expenses or help pay down a child’s student loan. There are some restrictions on the latter option, though. For there to be no negative impact on the student’s financial aid, he or she must still be in college, be a dependent, and the money must come from the student’s parents. If any of those conditions aren’t met, then the payment is treated as untaxed income and can reduce the aid from the gift by as much as half.

4. Donate wisely

Giving to a charity or a cause in the name of a loved one provides a lot of possibilities for creating a legacy for you, your loved one, and the gift recipient. We can help you to tailor and maximize your gift’s potential. The WSJ suggested creating or donating to scholarships, making gifts to zoos, and exploring donor-advised funds.

Donor-advised gifts are a very tax-efficient way to give. You make the gift to the fund and then suggest how the money is distributed to your favorite causes now or in later years. In this scenario, the you claim the deduction for the year in which you fund the account. Even if the fund distributes the money years later by making grants to charitable organizations, you only gets the deduction at the time you give the money away.

And now, our bonus suggestion:

5. Take care of the golden goose

Let us remind you that the biggest and most lasting gift that you can make for you loved ones is to put in place your own solid estate and financial plan. You can best protect your family with documents drafted by an experienced attorney and an investment and retirement plan guided by a knowledgeable financial advisor.

We hope this information is useful to you.  Don’t hesitate to contact our office for an appointment if you want to make any of these financial gifts a part of your estate planning.

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