Federal tax for monetary gifts
Hello Terry – I want to set up a custodial account for each of my 4 young grandchildren. I know there is no gift tax in Illinois, but there is an $18,000 “limit”, federally. My initial gift to each of them is under $18,000, but together, it will exceed that in one family. Do these funds go directly to each grandchild, or it considered a lump sum to my son (which would exceed $18,000) since they are minors?
Terry Says
DO NOT set up custodial accounts. They will weigh heavily against the family when they fill out the financial aid forms – FAFSA.
Instead open a BrightStart college savings fund.
Read this on how they work: https://www.terrysavage.com/529-plans-even-better-now-2/
