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Author: Jennlee222 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 311070  
Subject: Re: Niece, Nephew and, oh yeah, My Money Date: 6/27/2007 8:27 AM
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1. As many have said - just say no to the cosigning. It often turns out badly for the cosigner.

3. This one is difficult. I'd say I think they are too young. If you want them to only have the $500, I'd only give them the $500 for now.

One other thing on this in terms of gifting - you can gift them stock shares directly, rather than liquidating and giving them cash money.

You also gift them your basis automatically with a stock gift. So when/if they sell, they pay the capital gains according to your cost basis, not a basis for the time they received it. Since they probably have lower incomes, the gains will be taxed at a lesser rate. Might be a good way to divest yourself of cap gains by gifting the stock directly, rather than you selling, paying cap gains, and giving them the money.

This could give them some education on deciding whether to keep the stock or sell it, the meaning of cost basis, the ramifications of taxes, etc.

My grandmother gifted me $10000 in stock shares many years ago. It was very much a learning experience.
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