As you consider what you want to happen to your estate in the future, one of your goals may be to ensure that your loved ones have what they need for long-term security. Providing for heirs and beneficiaries may be one of your primary objectives, and through estate planning tools, you can accomplish that goal. Giving gifts during your lifetime is a practical way to ensure that your wealth ends up in the right places. There are specific ways you can decide what happens to your hard-earned wealth and property.
By gifting from your estate during your lifetime, you may be able to minimize tax penalties and other complications associated with transferring assets after your death. However, there are important considerations any time you make an important decision regarding your estate and the future of your finances. It will be helpful to take all possible benefits and potential drawbacks into consideration before you move forward.
The benefits of gifting now
Because of current estate and gift tax exemptions, it is prudent to consider this option now as future changes in the law could impact penalties for large gifts. By giving certain assets to loved ones during your lifetime, you could give to loved ones in a way that minimizes taxes and other penalties. If you decide to gift a loved one with property, try to choose options that will appreciate in value after it transfers ownership. This allows you to reduce your family’s taxes while passing on more after-tax wealth.
If you choose to gift property, you may also benefit from passing along property that will gain income in the future or continue to gain income it is already producing. This could benefit your beneficiaries that are currently in a lower tax bracket. If this is not an option, annual gifts could be the solution that best suits your individual situation.
Estate planning for now and in the future
One of the most important things you can accomplish with your estate plan is caring for your loved ones in the future. It may be beneficial for you to learn more about how you can pass on your wealth effectively, either now or in the future. Gifting during your lifetime or leveraging certain estate planning tools can help you accomplish your goals and feel confident regarding the future of your estate.
