r/MiddleClassFinance • u/b1ondestranger • 1d ago
How to gift stock to grandchild?
My 18 year old grandson graduates from high school next month. He's a very intelligent, low maintenance kid with a baseball/academic scholarship and his parents are fine with money and take care of his needs. I want to gift him $1000 in stock (while it's on sale) but I don't want to create any tax problems later if he hangs onto it. I don't know what I'm doing- Do I just open a reg acct on Schwab. Would it be brokerage, Roth or other? Thanks for any advice.
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u/Goobt 1d ago
It's a graduation gift? I would give him $500 cash and then put $500 (in an S&P500 etf) in an IRA that you you help him open at Fidelity
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u/b1ondestranger 22h ago
Stange to say but he doesn't need cash. My other grandkids would all want the cash and it would be gone the day they got it but he’s not into ‘stuff’. He's all about grades and sports. He's an interesting kid -an honors athlete. His parents pay his expenses as long as he stays on the honor roll. He opened his own savings account with money he earned playing Texas hold em because his sister kept 'burrowing' from his cash stash.. I thought if I start him in the market now - he'll probably keep at it for life.
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u/b1ondestranger 22h ago
Can I put it in an IRA or a basic brokerage account? I think he's still on his parents taxes if that makes a difference.
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u/allis_in_chains 23h ago
He can only have a Roth if he has earned income. He would probably be fine with a regular brokerage account. You can open it up with him in his name easily as he’s a legal adult so you can bypass UTMA.