How Gifting Benefits You and Your Loved Ones
When you are drafting your estate plan, what better way is there to show your appreciation for someone than giving them a gift? In some cases, the gifts you give away towards the end of your life may be the saving grace a loved one has needed for quite some time. But the benefits are not only for those you are gifting to, but also for yourself.
When an estate is over a particular value in California – currently set at $5.43 million in 2015 – it will start being picked apart by federal taxes. The only way to avoid these taxes is if your estate is under that value. What can be done to lower your estate’s total value? Gifting, of course, and it is the season for that! You are permitted to give as many gifts as you want each year, as long as no single recipient receives more than $14,000 in that calendar year.
Staggering Gifts, Increasing Benefits
Obviously, this makes it difficult to gift large items like homes and most automobiles. Or does it?
You can gift percentages of ownership for items, such as pieces of land, to avoid the $14,000 gift limitation. For example, you own a small cabin valued at $28,000 and you want your child to inherit it without worrying about taxes or probate. You can gift them 50% of the cabin’s official ownership this year, and 50% the next, circumventing the cap.
Although the financial advantage of gifting assets to your loved ones are clear when explained in this way, you will probably come to find that more than anything, it just feels good to know that you have helped the people who are close to you. With that said, however, gifting should not be seen as an endless font of benefits for those around you; you do not want to gift something and then regret it deeply later. Before you start distributing gifts, we encourage you to first consult with one of our San Jose estate planning attorneys. Schedule a case evaluation by calling (408) 548-7069 today.