If you’re like most people, you enjoy seeing your loved ones enjoying your gifts. It may surprise you to know that gifting is a part of estate planning. Sometimes, gifts are financial assets, other times they are legacy makers or other special gifts.
Make large gifts in consultation with an estate planning attorney
Gifting large sums of money should be made in consultation with a qualified estate planning attorney. It is often beneficial to give your gift to a trust for your loved one, as opposed to outright gifting. Gifting in trust provides asset protection that your loved ones cannot get for themselves. For instance, your gift can be protected if your loved one gets divorced, has a medical emergency, goes bankrupt, or is subjected to a lawsuit as a result of a car accident or malpractice claim.
In addition, if you gift over $13,000 in any one calendar year to any one person, you will need to file a gift tax return. This doesn’t mean that you’ll pay gift taxes, just that you need to file an informational return. Your estate planning attorney can guide you.
Other types of gifts
Estate planning is not just about cash. It is also about family relationships, leaving a legacy, and sharing your wisdom.
The gift of an experience is a much appreciated gift. Perhaps, it is a family beach vacation or sponsoring your grandson on his band trip to the Rose Bowl parade. Music lessons, summer camp, astronaut camp, gymnastics are all wonderful examples of experience gifts.
The gift of personal growth is tied closely to gifts of experience. Examples would include paying for a class, personal development seminar, or professional development CDs for a loved one.
A legacy gift is a sentimental gift to spur memories of good times together. For instance, if a grandfather taught his grandson how to use tools and make bird feeders, a legacy gift would be the grandfather leaving the tools to his grandson.
If you have questions about gifting, how to gift, or what to gift, consult with a qualified estate planning attorney.