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What is the right way to give assets while alive?

| Jan 12, 2021 | Estate Planning |

While you want to handle your estate the right way, you also want to minimize costs for yourself and your heirs and beneficiaries. What is a strategic way to give away your assets as gifts?

Kiplinger offers insights for navigating gift-giving for various estate purposes. Learn how to take control of your estate and minimize taxes.

Act early

One benefit of distributing estate assets while alive is that you get to see the joy of your beneficiaries receiving them. Another advantage is that the fewer assets that might go into probate, the less you have to worry about your heirs paying to move the probate process along. Even with an airtight estate plan, you may worry about your assets going to the wrong person. By giving your belongings as gifts while still alive, you know for sure that the intended person received the intended gift.

Avoid taxes

Your estate may not endure probate, but that does not mean that you do not have to worry about estate tax. Giving gifts early reduces your estate, which also reduces the chances of your estate facing state and federal estate taxes.

Test the waters

Maybe you feel uncertain about how much inheritance to leave your adult children or grandchildren. You can give a lifetime financial gift with instructions on how to use the money, such as investing it or putting it into a savings account. Wait a year or so before circling back with the recipient to see how well she or he managed the money. From there, you have the information you need to make a well-informed decision regarding how much to leave for an inheritance.

Manage your estate on your terms. Distributing assets now may save you a lot of headaches later.