I would say that it depends on the circumstances. If a parent or grandparent gives the child a stock or bond and the child sells that stock or bond, the cost basis for tax purposes is what the grandparent's cost was and if it is the stock that the grandparent bought a year-and-a-half ago and its value is the same now, as it was a year-and-a-half ago when they bought it. That is fine, there is no tax consequence, but the person was lucky enough to buy Microsoft 10 or 20 years ago and it is now worth four times as much as it was then selling it and reinvesting the proceeds may have tax consequences and one needs to look at the individual circumstances to understand whether that tax cost was incurring. In general, I'd encourage any assets towards college to be diversified. That means, on the downside, if a stock, you know doubles or triples, you are not going to participate that gain, but the other side of it is if the stock goes down dramatically, you are not trust off for the losses either and a diversified portfolio is particularly important if you got a more limited pool of assets. So, the two bits of advice are presuming that it is manageable from a tax standpoint, I would encourage people to consider liquidating an individual security particularly an individual stock and instead investing in a more diversified portfolio. When children are born, many parents or grandparents will, for example give saving bonds, those are low return items, but they certainly provide certain day they provide some tax deferral. It is a little less compelling that I did suggest people cash those in. Again, it depends on the scale and magnitude of the dollars. These so called 529 plans like that do offer pretty compelling tax advantages though, particularly if the child is to look good ways away from school. When you cash a savings bond, you are going to pay taxes on its growth or as in a 529 plan. As long as those funds are being used for college expenses, you never pay taxes on gains.
