Legacy Assurance Plan: Gifting

Monday, May 15, 2017

Estate Planning | A Gift to Yourself and Your Loved Ones

Summary: Creating an estate is one the greatest gifts you can give yourself and your loved ones. Your plan can give both you and your loved ones the confidence that comes from knowing that the decisions that will get carried out after you die (or after you are unable to speak for yourself) are exactly consistent with what you would have wanted. With this confidence, you and your loved ones can have the peace of knowing your legacy is the one you truly intended.

During the holiday season, many people obsess over the giving of gifts. They worry and fret regarding whether the gifts they've given are "the perfect gifts." Of course, another holiday season has passed and, with it, the time for giving holiday gifts. However, there is still one truly perfect gift you can give yourself and your loved ones, and that is an estate plan.

To yourself you are giving the giving of peace. Your properly crafted and executed estate plan can give you peace of mind from knowing that your legacy will be the one you wanted to leave. You can have confidence knowing that your wealth will be divided and distributed exactly in the manner that you want. With no estate plan, your assets are divided by a state statute enacted years ago by the legislature of the state where you reside. If you have estate planning goals that go beyond just dividing your wealth among your natural children and your spouse, then your plan can give you the peace of knowing that all of those that matter to you will be included in your plan.

Maybe you have a favorite charity (or charities.) Perhaps you have stepchildren whom you never adopted but whom you consider to be "your kids." Perhaps you have a beloved non-spousal partner, a trusty neighbor or dear friends who are important parts of your life and whom you want to be a part of your estate plan, as well. With your plan in place, you can rest easy knowing that they will all be included.

Your plan also gives you peace of reducing the risk of your goals being thwarted. Maybe you have a child with whom you have an estranged relationship and whom you've decided to leave only a small (or no) inheritance. Even if your relationship with all your relatives is great, you could still be vulnerable to challenges by people such as someone alleging that he/she is your long-lost biological and legal child. With your plan, you can know that you've put down on paper exactly who is, and is not, supposed to receive a portion of your wealth.

This minimizing of the risk of courtroom battles also ties into another gift, which is the gift of providing for your family. You've spent most of your adult life providing for your family. Why wouldn't you want to take the necessary steps to give yourself confidence that you've continued to provide for them even after you're gone? Beyond just reducing the risk of estate litigation, your plan gives more to your family. Your plan gives them the confidence in knowing that the actions that get carried out after you've passed, from your final arrangements to who gets the house to who gets your prized collectibles, are exactly the ones that you'd have wanted.

Speaking of giving your family confidence, your plan can pass on this gift even before you die. Should you be in a position where you cannot make decisions for yourself, your plan documents can speak for you. Whether it's management of your assets or something much larger -- like end-of-life decisionmaking -- your plan, in the form of your powers of attorney and living will, can speak to your loved ones (and to others like financial institutions and doctors) for you, to ensure that your wishes get carried exactly in the way you want.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

This article written and published by:

Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

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Tuesday, November 1, 2016

Estate Plan Gifting | The Pros and Cons

Summary: Each person's set of estate planning goals can be as unique as the person creating a plan. How you utilize gifts as part of your overall estate planning, or whether you will use them at all, can depend on a wide array of considerations that are a mixture of the legal and the personal. For those that may desire to include gifting in their estate planning, there are many possible benefits that they can realize, but there are downsides as well, if the gifting plan is not carried out carefully.

When people start to consider an estate plan, some approach this prospect with the idea that the best use of their assets is to save those assets during their lifetimes, or use them themselves, and then distribute what remains upon their death. For others, though, the greatest enjoyment of their wealth is derived from giving a portion of it away during their lifetimes. You can realize substantial benefits from using gifting in your estate planning, but it is essential to make sure that the gifting plan you undertake does not entrap you in one or more of the potential pitfalls that exist.

One of the first things to consider is making sure that your gifting plan doesn't create negative tax consequences. Federal tax law sets the annual gift tax exclusion at $14,000. This means that you can give up to $14,000 to as many people as you want and those are not considered to be taxable gifts for purposes of federal taxes. If you give somebody more than $14,000 in a year, this generally constitutes a taxable gift for federal tax purposes. There are certain exceptions to this, though, like tuition or medical expenses, or gifts to a spouse.

It's important to be aware that you do not have outright give an asset to someone for free for it to qualify as a gift under the federal law. For example, if you sell your SUV that has a fair market value of $40,000 to your daughter for $20,000, the federal tax laws view this as a $20,000 gift to your daughter. This is, of course, more than the $14,000 limit and would be a taxable gift for federal taxes. Another thing that can trigger a "taxable event" is adding someone to your deed. Say, for instance, you decide, as a means of avoiding probate, to alter the deed on your $250,000 home by "adding" your son, making the two of you joint tenants with right of survivorship. In this example, let's also assume that you receive no money from your son for this transaction. One of the consequences of this is that you have, under federal tax rules, made a gift to your son in an amount equal to 1/2 of the value of that home, or $125,000. (There are, of course, potentially less pitfall-filled ways to deal with this home and still avoid probate, such as a revocable living trust or a transfer-on-death deed.)

If you are also planning for Medicaid eligibility, it is vital to be especially careful. While the IRS allows you (as mentioned above) to make as many gifts in a year as you want so long as each one is $14,000 or less, the rules for Medicaid qualification are more strict. Even those gifts that are covered by the federal gift tax exclusion may possibly lead to a period of Medicaid ineligibility (a/k/a a transfer penalty) depending of the specific details of that asset transfer.

If you want to engage in the gifting of assets as part of your estate planning, be sure to work with an experienced estate planning team, who can help guide you through the process and make sure that your generosity in the present term will not cause you or your loved ones problems in the future.