Gifts use an important tool for Estate Planners to avoid federal estate taxes. If presents do not take into account the special situations of the giver and recipient it might create more damage than aid.
Ensuring your estate is not subject to federal estate taxes is a primary goal in estate planning. Gifts are an important tool to ensure your estate does not exceed the minimum quantities exempt from estate taxes. However use of gifts without careful planning might create extra issues.
Even though gifts might be beneficial it is essential to comprehend the potential pitfalls. A few possible problems to look for might include:
Gift might activating other taxes
Using gifts to prevent estate taxes may have other tax implications. It is essential to ensure your gift falls within one of the exceptions to the federal gift tax. Likewise it is very important to understand giving a gift that has actually appreciated in value may leave the recipient paying capital gains taxes. If the purpose of your gift is to avoid taxes then it is important to take a look at the big picture.
Another issue to understand is how a gift can impact the receivers eligibility for financial and medical assistance. A gift might trigger a trainees to lose monetary aid, an individual with unique requirements to lose financial and medical assistance, or an individual classified as low income to lose advantages such as Medicare. A gift might be offered with the finest objectives, however without correct planning it might actually trigger more harm than help.
Lastly I would urge you to comprehend the affect offering a gift might have on you. You may be offering away property that ensures your monetary security. In addition you will surrender control of property that may have emotional worth. A gift to a child might seem natural method leading honor the sentimental value, but there is no warranty the property will not be offered or re-gifted later. It is essential to comprehend when you offer a gift you are quiting control of the property.
This post is suggested just to supply details and is not intended as legal advice. If you have concerns worrying your specific case you should make a consultation to speak with a lawyer about your choices.