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Should you gift assets now to avoid probate trouble?

On Behalf of | Dec 28, 2022 | Wills and Probate |

A will helps you to distribute your assets after your death. But you do not have to include everything in a will to provide it for your heirs. You also have the option to gift it to them before you die.

Giving away assets while you are still alive helps to guarantee things happen the way you want. There is the potential for many issues to come up after your death, so you cannot guarantee, even with a good estate plan, that everything will occur the way you wanted. But is gifting the best idea?

Perks

The biggest perk of giving away your assets now is you can sometimes help your heirs avoid taxes. The IRS allows for a specific value of gift every year that you can give without having to pay taxes on it. It can also be good for your estate as it brings down the value, which can reduce any estate taxes that may be due when you die.

Warnings

Not every asset is ideal for gifting. It can be tricky to give away an asset that will gain value due to tax issues. You may also find it is easier and better to give away assets through a trust. A revocable trust will allow you to continue using the asset but will set your heir up to automatically receive the asset upon your death. It is usually a much more protected way to guarantee an heir gets an asset versus leaving it to them in a will.

Once you give away an asset, you lose legal ownership. In some cases, this may not work for you. It is important to find the right balance between giving away assets and keeping assets you still need. You do not want to put yourself in a position where you have given everything away and have nothing left for your remaining years.

For this reason, it is a good idea to develop an estate plan that takes everything into consideration. You may find gifting works for some things and not for others, which is fine. Just make sure if you are gifting that it makes sense for the big picture.

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