Gifted Stock

Your grandparents bought stock in a company. They grow older. Sickly. Pruney. They know they don't have long. They gift the stock to you.

Why gift stock vs cash? Well, there are huge tax advantages to gifting stock rather than cash.

Grandmama bought Coke stock on the sly in college for a buck a share. It's $45 now. If she sold the stock, she'd pay taxes on a gain of $44, to net her about $30 a share.

She could then give you $30 in cash—but if she just gave you the stock itself it "re-basis-es" or resets its base value, as being worth $45 to you, as if you paid $45 a share for it. So there is then no tax paid on the spread from the dollar she paid to the current value of $45.

In most situations, the max amount allowed to be gifted is about $15,000 a year, so most gifts of stock happen over years as Grandmama hangs onto life like a rock climber in a windstorm. At the end of their lives, they're allowed to gift about $11 million in total before the taxman really cometh...and this can be valued in the form of appreciated stock, which...you will really appreciate.