Should you make substantial lifetime gifts to minor children and grandchildren? Doing so could shift some income tax to a minor's lower tax bracket and move assets from your holdings to reduce estate taxes. And there are alternatives. Among them, Financial Perspectives says:
"Make an outright gift. Transfer stock, mutual funds, cash, etc., to the minor. Gifts of $10,000 a year - $20,000 for married couples - are free of gift tax.
"Custodian accounts under the Uniform Gifts to Minors Act are practical for funding a child's education. Set up custodial accounts at banks, brokerages or mutual funds. The custodian manages the assets until the minor reaches the age of majority.
"Consider using trusts for larger gifts. They're more expensive to set up, but more flexible. With some trusts you can extend control of assets beyond age 21 - say, to 25 or 30, or even later."
GOOD ADVICE: "Successful investors start early, identify goals, follow a plan and invest regularly. They read financial magazines, join investment clubs, scour the Internet. Key to successful investing is simple: Time." (Mary Farrell, money manager, in "Beyond The Basics")