Q: A Fort Collins financial columnist recently suggested that appreciated Baby Bell stock should be given to grandchildren because it was so easy. I would disagree. Since I know just enough to be dangerous, what do you think?

A: Almost any kind of gift can usually be "easily" made. But gifting appreciated assets has any number of "booby traps" and should be among the last to be transferred.

Of course one of the major problems is that a $10,000 gift ($20,000 if both spouses join) per grandchild per year can be made tax free (gift tax free for the giver and income tax free for the receiver) but carries with it the giver's basis and an effective reduction of about 20% from the $10,000 because of the built in capital gain taxes. Thus only $8000 was actually transferred. If the stock were inherited, there is a "step up" to the date of death value and then if sold, no gain. Also if proper estate planning has been done, there are no estate tax problems.

And although for income tax purposes, the old rule of spreading income among a number of hopefully lower taxpayers to reduce overall taxes may still hold true to a limited extent, it probably will not have a significant impact on the total capital gains tax actually paid.

Then there is the whole issue involving gifting directly to minors, which I have covered in several previous columns. And then there is always the question of why give it away now and lose control. Why not make the decisions later based upon the facts that are present at that time?

Now the financial columnist could have discussed any number of other ideas instead of a straight gift (such as with a charitable remainder trust), but your degree of knowledge certainly did not make you dangerous but forewarned and thus able to protect you from the "experts."

Q: Do all debts have to be paid off before assets can be distributed, like a mortgage or car loan?

A: Unsecured debts do have to be settled before the Estate is closed and are usually paid from the "residuary estate." However, if debt is attached to a particular object, then the asset is distributed encumbered with the obligation, unless in the Will a direction is made to pay these kinds of debts. However, such an instruction may be unwise because the debt may either absorb the estate liquid assets or even force the sale of assets to raise funds to honor that commitment.