Presents provide an essential tool for Estate Planners to prevent federal estate taxes. If gifts do not take into account the special situations of the provider and recipient it might create more harm than aid.
Making sure your estate is exempt to federal estate taxes is a primary goal in estate planning. Presents are an important tool to ensure your estate does not exceed the minimum amounts exempt from estate taxes. Use of gifts without careful planning may create extra problems.
Even though presents might be helpful it is very important to comprehend the possible pitfalls. A couple of possible issues to expect may include:
Gift might setting off other taxes
Using presents to prevent estate taxes may have other tax implications. It is necessary to make sure your gift falls within among the exceptions to the federal gift tax. It is crucial to comprehend giving a gift that has valued in value might leave the recipient paying capital gains taxes. If the purpose of your gift is to avoid taxes then it is crucial to take a look at the huge picture.
Another concern to comprehend is how a gift can impact the recipients eligibility for financial and medical help. A gift might cause a trainees to lose financial help, a person with special needs to lose monetary and medical help, or an individual classified as low income to lose benefits such as Medicare. A gift might be offered with the best intents, however without proper planning it might really cause more damage than help.
Lastly I would prompt you to understand the affect providing a gift may have on you. You may be distributing property that ensures your financial security. In addition you will give up control of property that might have emotional value. A gift to a child may seem natural method leading honor the emotional worth, but there is no warranty the property will not be offered or re-gifted later. It is essential to understand when you give a gift you are offering up control of the property.
This short article is implied only to offer information and is not meant as legal suggestions. If you have concerns concerning your particular case you must make a visit to talk to an attorney about your choices.