By Ruthven R. Phillip

any of us can attest that this holiday season will be very different from the most recent years in that the impact of inflation will require us to be more prudent.

Yes, the usual suspects are still at the top of many individuals’ shopping list—clothing, jewelry, footwear and electronics. But, should our gift giving be influenced by the major events of the past three years? For example, Covid-19 changed the way our world will operate forever. More importantly, it also exposed some of the major economic disparities between, the haves and the have-nots, people of color and minority groups, the rich and the poor, entrepreneurs and investors and savers and spenders.

I would posit that if we view our holiday season gift giving through that prism, more finance-related gifts would be on our shopping list.

Recipient and Goal

Providing financial gifts this holiday season is no different from sharing other gifts. However, you should know the financial objective the recipient is trying to achieve. Sure, you can gift an iPhone, but what if financial development is more important, especially if their current communication device is functioning well? I would suggest if you were providing a financial gift to someone or a family, try to identify something that can assist them to build, change or improve their finances. Who knows, it could help them become a millionaire or billionaire!

Gifting Stock

Today it is possible for you to gift a stock or even a portion of a stock. When gifting stocks to children, the navigation could be a bit trickier since you may have to establish a custodial investment account. This account comes with fiduciary responsibilities. You should note that depending on the brokerage company these accounts may not allow for the investment of certain assets. For example, some speculative investments may not be allowed. However, the great news is that there are other custodial accounts that would allow you to gift not only stocks but other assets such as real estate, works of art, digital assets or even intellectual property.

There are some companies such as Stockpile which would allow you to gift a stock to a child. They are by no means the only company providing such services, but I share them as an example of the gifting possibility. www.stockpile.com

529 Plans

Even though this form of gifting has existed for several decades, there are not enough people taking advantage or making use of it. Nerdwallet.com defines the 529 plan as “a type of savings and investment account in which money grows tax-free as long as the withdrawals are for qualified education expenses. The plan is named after a section of the IRS code [529].” The great news is that you can start a plan with as little as $25 in some cases and contribute $5 monthly.

Some individuals may be discouraged from establishing a 529 plan account because they feel that it will reduce and impact the child’s eligibility to receive federal financial aid. College surveys have shown that less than one-third of the 529 plans have any impact on financial aid eligibility. It’s not that black and white however! Factors determinative of federal financial aid impact include what type of federal aid is being requested, who owns the plan and when the withdrawals occur. According to the Saving For College report, a 529 plan may reduce a student aid application by a maximum of 5.64% of the plan’s value after considering the Asset Protection Allowance of an estimated $10,000.

Further, there are several things you may not know when considering a 529 plan contribution as a gift. Anyone can open and contribute to the plan; you can have more than one account, you can frontload the account and plans are not limited to tuition. Among all the great gifting benefits, the one that is most meaningful, is that a 529 plan can last for generations! It’s a great tool for estate planning.

Take Away

There are several types of financial gifts one can give this holiday season. If you know a couple or friend is struggling with their finances, why not pay for budgeting classes? If the person likes books or audio books, send them a holiday gift book set on basic investing or how to teach a child the basics of money. Financial gifts this holiday season are one experience you can use indirectly to close or change the wealth gap.

The whole point of giving a financial gift is to help individuals become better with money management. And while you’re at it, if you know someone who struggles with time management, send them a digital planner which can help them to become more successful. Don’t take stewardship for granted!

Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Advisor, and CEO of Give2Getrich, LLC Give2Get Rich, LLC 2022. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.