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Lifetime gifts as part of an estate plan

On Behalf of | Feb 6, 2023 | Estate Planning | 0 comments

Large estates might be subject to taxation or other forms of dilution during the disbursement process. Some assets also fluctuate in value.

These two factors have led many people to consider giving part of their estate away during their lifetime. This is a complex decision with various factors, but there could be some legal aspects to it.

Issues of control

Giving a gift to someone is an altruistic gesture. In other words, it might not afford the giver much control over how the recipient uses the funds.

Trusts are another popular option for sharing wealth during life rather than after death. Trusts could provide more control for the person giving the gift. Some people prefer this control — when giving to younger people, for example. However, forming a trust is typically a more complex process than giving away money or assets.

Tax and legal issues

Gifts exceeding a certain dollar value could require either the donor or the recipients to file gift taxes. This maximum value — or the annual exclusion, in more technical terms — rises frequently and is currently well over $10,000.

The exclusion is per recipient. In other words, someone could give the maximum excluded amount every year to every donee in the estate plan.

Gifts and the big picture

Many people are choosing to give gifts during their lifetimes to take advantage of various tax and market conditions. However, donors also choose to do this because it makes them feel good to see their loved ones use the money to pursue dreams and secure futures.