The primary focus of most estate plans is the eventual distribution of an individual's accumulated wealth. This is an important topic, as there are a number of issues that should be addressed, including the various tax ramifications of passing down wealth. However, many Tennessee families can benefit from beginning to distribute those assets prior to death, which has a number of advantages to traditional estate planning.
For one, gifting assets prior to death will reduce one's taxable estate, which is a consideration for many families. Another benefit is being able to enjoy watching loved ones make use of their intended inheritance during one's lifetime. It can be incredibly rewarding to give an adult child a financial gift that allows him to open his own business, or gives her the chance to go to the college of her dreams.
To take a different approach, gifting allows individuals the chance to "test" their loved one's ability to make judicious use of an inheritance. For example, if an adult child is gifted $10,000 and chooses to squander that money in a short period of time, a parent can see that passing down even more cash might be a poor approach. Instead, a carefully structured trust might be a better option, which would reward mature decision-making or achievement.
Each and every Tennessee resident has a unique set of financial needs when it comes to estate planning. For many, gifting prior to death is a great way to pass down wealth to family members. When considering such an option, it may be helpful to sit down with an estate planning attorney to discuss how gifting can be worked into a larger estate planning approach.
Source: marketwatch.com, "How to take the stress out of estate planning", Brian Vnak, Sept. 2, 2015