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Estate Q & A
What Are the Benefits of Lifetime
Gifts?
Eventually, your estate will be transferred to your beneficiaries,
whether during your lifetime or upon your death. Some affluent individuals
may not like the idea of giving away parts of their estate during their
lifetime, but lifetime giving is one of the most basic estate planning
tools available. It may not be one of the best options for everybody, but
that is a consideration better made sooner than later. Here are a few benefits
of making lifetime gifts:
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Lifetime gifts reduce the size of your taxable estate;
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In most cases, assets transferred as lifetime gifts are protected
from your creditors;
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Lifetime gifts are made privately, unlike transfers through
probate;
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Making lifetime gifts may reduce the costs of probate;
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By making a lifetime gift rather than a testamentary transfer,
you transfer not only the assets, but the ability to enjoy those assets
for a longer period of time;
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Making lifetime gifts to your beneficiaries may give you
a clue as to how those beneficiaries will handle their wealth, thus giving
you time to devise safer methods of transferring assets to spendthrift
beneficiaries.
Taxpayers who have decided to make lifetime gifts part of
their estate plans should work to maximize the benefit of those gifts.
Currently, each individual can transfer up to $10,000 (taxable value) per
person per year, and couples can transfer $20,000 per person per year.
(Each individual can also transfer the lifetime applicable exclusion amount
of $675,000 without incurring federal estate tax.)
Source: Associated Press 6-14-2000
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JULY 7, 2000