Withdrawing money for my children from my stock portfolio
I have approximately $1 million in my portfolio. I am 78 years old and I would like to distribute approximately 150,000 to 3 children now instead of waiting till my death. Is there a way to go about it where I don’t get raked over the Kohl’s by the government.
Terry Says
Well, you probably won’t get raked over the “coals” (the leftovers from a slow-burning fire!) in any case. But let’s think about whether this is a wise move at this point. It’s nice to want to distribute money to your children — but what if you NEED the money during your lifetime?? Think about what would happen if you couldn’t take care of yourself in your home, and wanted to pay a helper. Would your children be there on a regular basis? Or perhaps you’d want to move into a senior residence. Those are expensive!
So, I’d advocate keeping your money — and creating an “estate plan” — a revocable living trust to distribute your assets AFTER your death. Watch this short video to understand: https://www.terrysavage.com/wp-content/uploads/2022/10/Terry-Talks-Wills-Trusts-Estate-Planning.mp4
But to specifically answer your question, you can give $18,000 per year to anyone, and to any number of people, without running into the estate and gift tax rules. And at this point, the estate tax won’t come into play until your estate is worth more than $13.6 million (lower in some states), so I wouldn’t worry about the gift tax. But maybe start with just a smaller gift and/or a payment for college tuition this year?
One more thing to consider. You say this money is “in your portfolio.” There will be taxes to pay if you sell stocks to withdraw the cash. But after your death, assuming this is not in a retirement account, your heirs can sell shares and pay no capital gains tax. So consult your tax advisor before making this move.
