How Does a Legal Gift Work?
While most gifts we give and receive on birthdays and holidays are simple, the legal concept of the gift is more complicated. Continue reading to receive a brief introduction to the legal concept of the “gift” and why someone might choose to include a gift in their estate plan.
First, let us discuss what a gift is and how it fits into the array of other available estate planning tools. A gift is a transfer if actual ownership of property from one person or organization to another for less than it is worth. Gifts can be made to individuals or organizations, although the taxation ramifications vary depending on who the recipient is.
You may want to consider adding one or more gifts to your estate plan if you want to divest your assets. This may be wise if you believe you may need to enter a nursing home or other long-term care facility at some point, and you want to protect your assets from claw back by the State. Of course, there are many other reasons why a gift is a good way to divest your assets. You may also consider employing a gift as an estate planning tool because it allows whatever property you gift to avoid the probate process as well or federal estate taxes. By avoiding probate, you avoid paying fees associated with the process. However, the recipient of the gift may still have to pay taxes on the gift. An attorney can help you determine whether a gift is the most advantageous estate planning tool for your assets.
There are some reasons why a person may choose not to use a gift as part of an estate plan. Some people are hesitant to gift because it means that they will lose the power to control their property before they pass away. Other people may worry that the recipient of the gift will not use the gift wisely, or that they may need the gift if their financial situation changes suddenly. Concerns like this depend on the personal circumstances surrounding the overall estate plan. If you are considering including a gift in your estate plan but have concerns like these, seek the advice of your attorney who can help you identify the best way to navigate your situation. Now that you know a little more about gifts, you may have questions about your own estate plan. Contact an attorney at Kelly & Brand, Attorneys at Law, LLC for sound legal advice that is personalized to your unique situation.