Four Ways to Make Lifetime Gifts

We often hear that our clients do not want to wait until they pass to make gifts to their children or grandchildren. Gifting may be an excellent planning strategy for many families, for two common reasons: (1) so our clients can watch their beneficiaries enjoy the gifts and (2) for tax planning.

Moral equity is a large factor for many families, so below we will discuss four gifting strategies that you can employ to ensure that everyone is treated fairly. We are here to simplify the details for you!

  1. Outright Gifts Now.  Generally speaking, you may make a gift to any donee up to the annual exclusion amount published by the IRS. For 2024, the annual exclusion amount is $18,000; therefore, an individual person may gift up to $18,000 per recipient without any gift tax consequences whatsoever. This amount increases to $36,000 per donee if you and your spouse make the gift and file a joint tax return.
  2. Future Gifts. This is the typical route taken in Estate Planning documents, especially Trusts. You decide what you want to include in your estate when you pass, and whether to divide it evenly (or unevenly) among one or more beneficiaries of your estate. You may divide your property among whoever you choose, as long you draft it properly in your documents. We have experience dividing property among children, grandchildren, other family members, friends, charities, and even pets (the options are nearly limitless).
  3. Future Gifts with a Retained Interest. If you have an asset that you know you are going to keep until you pass and you know exactly who you want to have it after you pass, then you may achieve a tax benefit for the future gift by assigning it to a beneficiary before anything happens to you. By retaining a “life estate” or life use provision in an asset, you retain your possessory rights to the property until you pass. Once you pass, the asset flows directly to the next person listed. This can be an excellent planning strategy, especially for appreciating assets.
  4. Gifts Against a Future Inheritance – Advanced Distributions. Some of our clients want to equalize their distributions, but have ideas they want to implement now. For example, if you want to give one child $100k towards a down payment on a home, we can help you make the gift now, while concurrently updating your estate planning documents to ensure your other beneficiaries are treated equally/fairly upon your passing.

For any questions related to Estate Planning or Business Law, please contact us by calling 860.670.3535 or emailing jfournier@jeflegal.com.

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