Inheritances don’t have to wait until you’re gone

On Behalf of | Oct 10, 2021 | Wills and Estate

As you begin to think about your estate planning, you realize that you’re in a position financially where you can afford to give your adult children (or other family members) some of their inheritance now — rather than wait until you’re no longer around. 

A 2019 report by Merrill found that nearly two-thirds of Americans who are at least 55 years of age said they believed in giving some of their assets to loved ones while they were still around. By doing that, you can offer real-time guidance as you share your wealth with your loved ones –- whether it’s on choosing a grad school, starting a business or buying a first home.

Sharing some of your wealth while you’re still alive requires just as much consideration as it does when you leave it via your estate plan. Let’s look at some common questions.

Is there a difference in the tax impact?

That’s usually the first question most people have. The good news is that for most people, it doesn’t matter under the tax laws. Currently, an individual can give up to $11.7 million during their lifetime without estate taxes kicking in and an additional $15,000 each to as many people as you’d like before gift taxes apply. Those amounts increase each year for inflation, and they’re about double if you give as a married couple.

Am I being fair to all my kids if I give one an early inheritance?

That depends on the situation – and on your kids. If you help all of your kids out with the same types of things, like education and homes, they’re not likely to accuse you of favoritism. You may want to explain that you’re giving everyone the same amount, whether it’s now, later or both. 

Am I giving too much?

You don’t want to give inheritances early and then not have enough left for yourself years or even decades from now. You may want to start with small gifts – and maybe non-cash gifts like jewelry you never wear or artwork that’s just sitting up in the attic. You also want to make sure your kids can handle the amount you give them wisely before you give them more.

Before you gift an inheritance during your lifetime, it’s always wise to seek legal and financial guidance. That may even help you uncover options you didn’t know were available.

FindLaw Network

Categories

Archives