Tighten the belt in 2009

If you made a new year's resolution to improve your finances, a new Business Monday feature can help. Tighten the Belt in 2009 will offer a weekly personal finance problem, from investments to job searching to groceries, and offer solutions. Here is the first:

Problem: You have a load of beaten-down stocks in your portfolio.

Solution: Consider giving some of that stock to your kids. There's a silver lining to stock prices' descent: You can give away more shares tax free.

In 2008, an individual can give as much as $12,000 to each gift recipient before getting hit with gift taxes. That amount will rise to $13,000 in 2009. The gift helps reduce the size of your estate — probably a good idea since the estate tax isn't likely to go away soon, financial advisers say. It also could allow the recipients to enjoy a nice rebound from today's depressed stock prices over the long haul.

Another approach: Consider a grantor retained annuity trust, or GRAT. You can put your beaten-down stock in the GRAT, name your children as beneficiaries, and receive an annuity from the trust based on a percentage of what you contributed. As long as you survive the trust term, often just a couple of years, any stock appreciation beyond a "hurdle rate" set by the government passes to the beneficiaries tax-free. That hurdle rate, currently 3.4 percent, is at historically low levels, and it's set to move even lower.