"Gift Possibilities to Your Children"... A 3-Step Strategy of Gifting, Investing, and Delivering

During holiday gatherings with relatives, how can one communicate plans for building assets for a child's future? According to a video from Bakgomhee TV, a systematic approach consisting of three stages—'gifting, investing, and delivering'—is required to gift future possibilities to a child.

A Child's Asset Schedule Completed in 3 Steps: "Gifting-Investing-Delivering"

The presenter summarized the things parents can do for their children into three stages. The first is 'gifting.' This is the stage of opening a securities account in the child's name and transferring assets. The second is 'investing.' This is the process of actively managing the gifted assets for the child's future, rather than simply leaving them tied up in savings. The video emphasized that parents must consider appropriate investment strategies so that the gifted assets do not remain only in savings. It explained that the strategic difference between lump-sum investment, where a large amount is deposited at once, and installment investment, where a certain amount is deposited every month, must be considered. The final third step is 'delivering' these assets when the child becomes an adult. This is the stage of providing options so that the child, upon entering society, can use the funds as initial capital (such as jeonse deposit, tuition, etc.). In particular, it can be usefully applied at a time when the parents' economic burden increases, such as when the child moves to another region after entering university and incurs monthly rent or tuition.

Methods of gifting are largely divided into three types. If there is cash, it can be gifted within the tax exemption limit of 20 million won, and if one holds stocks, they can be gifted as stocks. If the value of the stocks held by the parents is undervalued, utilizing them is also a method. If there is no large sum of money immediately available, the 'periodic gift of a fixed amount' method, where a certain amount is transferred to the child's account every month, can be utilized.

Checking the '2-Month Average Price Before and After' is Essential When Gifting Stocks

When gifting in the form of stocks, one must be careful about the method of calculating the gift value. The video explained that if stocks are gifted, the value is determined based on the average stock price for a total of four months—two months before and two months after the date of the gift. If the stock price surges and exceeds the 20 million won gift limit, a gift tax of 10% or more may occur on the excess amount. This is because the gift tax rate in South Korea starts at 10% and increases incrementally up to 50%. In this case, one can consider options such as completing the gift when the gift value is low, or withdrawing the gift depending on the situation when the stock price surges.

The subject responsible for calculating and reporting the gift value is the taxpayer themselves. The presenter advised, "The person who does not want to pay taxes must provide proof," suggesting that one should obtain the closing price data for the four-month period of the relevant stocks through Naver or HTS, calculate the average value using Excel, and attach it as supporting documentation. Specifically, along with the fact that stocks were transferred to the child's account on a specific date, one must prove that the gift value does not exceed 20 million won through an Excel file summarizing the closing prices for the two months prior and the two months after. The gift report must be completed within three months from the date of the gift, and the video mentioned that it is appropriate to report immediately at the point when the average closing price is finalized, two months after the gift.

How to Use 'Periodic Gift of a Fixed Amount' by Transferring 189,000 Won Every Month

For parents who find it difficult to gift a large amount immediately, the 'periodic gift of a fixed amount' can be an alternative. This is a method of gifting by discounting the amount to be paid in the future to its present value; the video mentioned a case of automatically transferring approximately 189,000 won every month to a child's account for 10 years. By designing it so that the total amount to be paid over 10 years does not exceed 20 million won when discounted to its present value, it is possible to gift without a tax burden.

To execute this method, one must capture and prove the agreement to automatically transfer a certain amount to the child's account on a specific date every month, and similarly, prepare Excel data proving that the total amount over 10 years is within 20 million won based on present value. Specifically, one should set up an automatic transfer agreement to the child's securities account in line with a monthly payday, etc., and prepare materials that can prove this. The assets formed this way can be usefully utilized when the child enters university or becomes a newcomer to society and needs a housing deposit, etc.