I'm letting my (barely) adult children live with me until they have enough saved in order to buy a home. I'm collecting a trivial amount of money from them every month. I don't need this money and I'm planning on giving it back to them once they move out. They don't know that I'm planning to do this and I'd prefer for it to be a surprise.
In the end, it probably won't be much money, since the amounts are not large, but I figure it could help with furnishings, etc, once they move into their own space.
My question is around the logistics of how to do this?
I'm thinking of opening up separate accounts for each of them at a brokerage house and buy a total US index fund each month. The accounts will be in my name and then I will transfer (gift) the account to them once they move out.
Any downsides to this approach? Any other ideas?
I realize that I'll have to be careful of gift taxes, but I doubt the amount will exceed 15k total. And if it does, I could spread it out over a few years. From what I've been able to determine, the cost basis transfers with the gift, since I'll transfer the funds. I'm hoping that if we stay at the same brokerage, this will transfer cleanly to a new account so they don't have to track the cost basis?
And if the value of the fund has a loss, then my plan would be to sell it, takes the capital gains loss for myself, and transfer them the cash (and possibly make up the loss).
Anything else that I should take into consideration?
Thanks in advance for any advice.
In the end, it probably won't be much money, since the amounts are not large, but I figure it could help with furnishings, etc, once they move into their own space.
My question is around the logistics of how to do this?
I'm thinking of opening up separate accounts for each of them at a brokerage house and buy a total US index fund each month. The accounts will be in my name and then I will transfer (gift) the account to them once they move out.
Any downsides to this approach? Any other ideas?
I realize that I'll have to be careful of gift taxes, but I doubt the amount will exceed 15k total. And if it does, I could spread it out over a few years. From what I've been able to determine, the cost basis transfers with the gift, since I'll transfer the funds. I'm hoping that if we stay at the same brokerage, this will transfer cleanly to a new account so they don't have to track the cost basis?
And if the value of the fund has a loss, then my plan would be to sell it, takes the capital gains loss for myself, and transfer them the cash (and possibly make up the loss).
Anything else that I should take into consideration?
Thanks in advance for any advice.