Polls suggest that a majority of Americans would rather give to heirs than leave them an inheritance so that they can see the results of the gift during their lifetimes.
The traditional way of passing wealth down to later generations by giving descendants inheritances through an estate plan does not work for everyone. If a child needs money to start a business now, many wealthy parents would rather give the child the money when it is needed and when they can see the results of the gift. The alternative might result in the child missing out on the business opportunity.
Surveys suggest that a majority of older Americans would prefer to give to heirs now rather than wait to give them inheritances. However, before giving to heirs now there are a few things that need to be considered.
This subject was taken up recently by Merrill Lynch in “Why Make Your Heirs Wait?”
These things include:
- If you give to one heir now, other family members might wonder what is going on and might want a gift as well, even if they do not have a pressing need for it. You should talk to your family and make sure everyone knows that a gift now might make their eventual inheritances smaller.
- Do not give to your family for selfish reasons. Consider whether the receiver actually needs and wants the gift. Giving someone a responsibility they do not want or are not ready for could be a burden to them.
- Do not give away so much that you neglect your own needs. Before giving to anyone take stock of how much money you need for your own retirement.
The other potential problem with gifting money during your lifetime is that if you have to go into a nursing home, medicaid will count any transfers for less that fair market value (gifts) against you if they occur within 60 months prior to your entering a nursing home.
A qualified estate planning attorney can help you think through your options and remove the emotion from the decision.
Reference: Merrill Lynch (Aug. 2016) “Why Make Your Heirs Wait?”
For more information, order a free copy of our report The 7 Biggest Mistakes People Make in Their Estate Plan by clicking the link. You can also register for a free estate planning workshop by calling us at 256-251-2137 or visiting www.AnnistonEstatePlanning.com.