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The Right Way to Gift Family Heirlooms

There are only a few holiday shopping days left. For those still scrambling to find something special to give, consider wrapping up an heirloom. Not only is it a meaningful and unique gift, but passing your great grandmother's sapphire broach now will save you money this holiday season (you don't have to buy a gift) and possibly save the recipient money in the future (by dodging the estate tax.)

Heirlooms can have both sentimental and real value. On the sentimental side, consider the benefits of watching your granddaughter try on that piece of jewelry for the first time. Also, include a note describing everything you might know about the heirloom (origins, previous owners, fun back stories) because while you might be able to tell this to the recipient, they might not remember all the details.

As for the real value, there are some tax benefits to gifting a valuable heirloom versus waiting to pass it on as an inheritance.

Dodging the Tax Man
If your heirloom carries more sentimental value than actual value, then you might not be worried about the tax implications. But for those with valuable watches and rings, remember that the annual gift exclusion for 2008 (it changes with inflation) is $12,000. This excludes spouses, who aren't subject to the same gift laws. Each recipient is allowed to receive a gift (or gifts) under $12,000 (it ups to $13,000 in 2009) before having to declare them to the IRS.

Even then, if the gift is worth more than $12,000, the recipient won't have to pay a tax on the gift, to a certain point. Each individual can give up to $1,000,000 in gifts in their lifetime outside of the yearly $12,000. However, this tax-free umbrella counts against the eventual estate tax exclusion ($2,000,000 in '08 and $3,500,000 in '09), so if you can space out the gifts yearly and stay under the $12,000 limit, your heirs will be better off in the long run.

Start Your Own Heirloom
For those who like the idea of an heirloom gift, but don't have one in their possession to pass on, consider that locket you've had for 20 years, or that vase you found at a vintage store back in the 60s. The only thing stopping these personal favorites from becoming heirlooms is you passing them on and starting the chain of giving.

And for those who like the idea of starting an heirloom, but want to think outside the box, here are a few alternatives to consider.

Other Heirloom Ideas

Flowers
Heirloom flowers are open-pollinated (i.e. by birds, insects or other natural forces) flowers that have been bred the same way for generations. "They're gorgeous, easy to grow, and worthy of a place in any garden, even if you know nothing about their history," says Scott Kunst, owner of Old House Gardens, which specializes in selling and preserving heirloom flowers. "But when you think about your grandmother growing them -- or Thomas Jefferson, or medieval monks -- that adds a whole other dimension to their pleasure."

Kunst notes that happy customers have returned with stories about how they had the same dahlias on their wedding altar that their grandparents had at their wedding back in the 1930s. "Christmas ornaments and holiday traditions seem to evoke the same kinds of reminiscing and story-telling, so the two go hand in hand."

Cookbooks
Passing on family recipes is an old tradition, but why not take it up a notch and bind those delectable treats? Getting Nana's Pecan Delight into writing alongside Pappy's Howin' BBQ sauce can be done on a budget or in high style. For those who want to keep it simple, go for a scrapbook approach, including the recipes and possibly family pictures of the recipe originator or of the finished dish. If you want a sturdier tome, go to a Web site like Cookspalate.com where you can order from 1 to 1,000 (for that next family reunion) of your custom books with options that include black and white or color, soft cover or hard cover, from 5x8 up to 8.25x10.5.

Fruit and Vegetables
Heirloom tomatoes are popular at the farmer's market, but they're just one of many fruits and veggies carrying the heirloom mantra. An heirloom plant is one that has not been hybridized over generations.

For those who don't have heirlooms to harvest but want to get started growing and passing on heirlooms, the Baker Creek Heirloom Seed Company boasts over 1275 unique varieties of heirloom seeds from 70 countries including gourds, melons, peppers and garlic.

Going with a holiday heirloom can bring out the family feeling back into what feels like an onslaught of corporate consumerism. Plus, it can save you a few bucks, which never hurts either.

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