The Art of Gift-Giving
- Posted in: Asset Protection
Are you planning to pass an inheritance on to your children? Ron Lieber, author of this article in the New York Times, writes that leaving a financial legacy may be more difficult than you think. “With each passing year” Lieber writes, “the pressures on the nest eggs of older people will only grow.”
Lieber outlines in his article 8 possible reasons you may not end up leaving the inheritance your children will expect, but the last one is the most interesting; “the transfer of wealth will increasingly happen while the older generations are still alive.” This is because more and more people are realizing the benefits of giving tax free gifts during their lifetimes, instead of waiting to leave an inheritance. I’m referring to the annual gift exclusion.
Giving a gift during your lifetime that is within the annual exclusion amount (currently $12,000 per person) means that you can have the satisfaction of seeing the recipient enjoy the gift during your lifetime, and you also may have the added benefit of reducing your taxable estate.
And just because you decide to give your financial gifts before your death doesn’t mean you have to give up the protection of giving your gift in trust. A trust can be created and used during your lifetime; a fact which can be especially helpful if one of your beneficiaries has special needs.
Most estate planning attorneys will tell you that if you want to spend your last dime on the day you die—so much the better! But it shouldn’t stop you from thinking about the future right now. Whether you plan to leave gifts to your children, grandchildren, or other loved ones before or after your death, let someone in the know help you find the most efficient way to leave the legacy you want. Give us a call and we can help.