Category Archives: Gifting

Estate Planning 101: 3 Things to Know When Making Gifts to Children (or Grandchildren)

Daytona Attorney Heidi Webb and family

Estate planning is a tricky thing, and there are a few things I encourage my clients to think about when they’re drafting their last will and testament. I’ve listed three important considerations that you should be aware of when you draft your will – and even as you reexamine it (which you really should do every few years). No matter who your estate planning attorney is, even is you write your will on a napkin, here are three things to remember when you’re setting up or reviewing your last will and testament:

1. Make sure everyone’s treated equally.

Estate planning–and primarily the lack thereof–can cause a lot of contention between family members. Who gets grandma’s diamond ring? How about the nice China? Will the siblings with children get more than the kids who decided to stay single and play live music at tiki bars for the rest of their lives? In estate planning, it’s really important that everything is equal for children or grandchildren left in the will. You don’t want to leave a wake of resentment, bickering, anger, and emotions when it comes time for your actual wake–know what I mean? Make sure you have your estate planning papers in order, but also make sure they will be perceived as fair by all your loved ones involved. 

2. Consider giving those “gifts” in your lifetime, rather than waiting until you’re gone.

A lot of people make estate planning all about death when in fact they could be making good use of their estate in this lifetime. College is expensive – instead of leaving your children or grandchildren thousands of dollars when they’re likely middle-aged or older (with their own money and their own children and estates to look after [or plan]), invest in their future and wellbeing with gifts like tuition funds and money for their deep passions or productive recreational activities. Hey, you know what? How about planning a family vacation if you have a big trust fund or personal nest egg just sitting there until death does you part. Make memories with your family now. Enjoy your money that you’ve worked hard for and take your family along to do the same. That’s much more meaningful then letting them enjoy your money after your death. And I’m sure they’d much rather have time with you and special memories (and a free vacation) then a bigger check when you pass away. 

 3. Don’t forget about long-term care.

You’re going to need help in your golden years. Therefore you’re going to need plenty of money in your golden years. It’s great to make gifts in this lifetime, but don’t forget the importance of caring for yourself and your own future as well. Medical care is expensive, and you want to be comfortable and secure when you’re older. It’s really important that no matter how healthy or young you are, no matter how much money you have (within reason), you should set a good chunk aside to prepare for the worst – or at least the inevitable. Nursing homes, physical therapy, assisted living, and hospice care should be part of your estate planning mindset. Your health and peace of mind is crucial as you encounter the many limitations and medical upsets that go along with being a senior citizen.

So, those are three basic things I would encourage all of my estate planning clients to consider and prepare for when writing out their will. Keep these things in mind and don’t forget to reexamine your last will and testament every few years to ensure that everything is set up to prevent family squabbles and the financial ills of not preparing for long-term care. 

About Heidi S. Webb, Attorney at Law: Heidi Webb is an estate planning and small business attorney located in Daytona Beach, Florida. See what clients are saying about Heidi, follow her on Facebook, and connect with her on Google+ or LinkedIn. Heidi’s AVVO profile is also available online, as well as many other lawyer referral sites.

What Makes $14,000 a Magic Number in Estate Planning?

Estate Planning and Gift Tax Returns – Knowing Your Numbers… 

Why is $14,000 a magic number in estate planning? Well, this is the amount of the current (2014-2015) tax exclusion, which means that anyone that gives away (or gifts) $14,000 or less to any one individual does not have to report the gift to the IRS. For those lucky people with an excess of funds, this can be a great way to ensure that your family and heirs get more of what might otherwise be their inheritance when you kick the bucket (hence, the IRS doesn’t take such a large percentage of your estate when you go).

This means someone with a decent amount of money could choose to gift $14,000 a year to one or more grandchildren. That way they–or their grandchildren–can avoid at least some of the hefty taxes that come along with the exchange of a rather large estate. These smaller gifts are made in their lifetime. 

If you gift more than $14,000 to any one person (other than your husband or wife) you will have to file a gift tax return (…in some cases this doesn’t necessarily mean that you’ll pay a gift tax: You only have to pay a tax if your reportable gifts total more than $5.43 million [figure from 2015] during your lifetime). 

If you have this kind of money to give, you can give this amount to as many people as you like. However, even if you’re wealthy, you need to be cautious about a few things before taking advantage of this magic number.

What You Need to Know:

If you think there is a chance that you will ever need to apply for Medicaid long-term care coverage, you should definitely consult a knowledgable elder law attorney before setting up any sort of gifting plan. Otherwise you may find that a gift you made to a child or grandchild could hurt your chances of getting Medicaid coverage for long-term care costs.

The IRS may not tax you if you stay mindful of the magic gifting number; however, IRS rules and Medicaid asset transfer rules are two separate entities: If you apply for Medicaid long term care coverage within 5 years of gifting, you may face stipulations or consequences when it comes to securing long term care in a nursing home. 

When Gifting: Plan Ahead, but Expect the Unexpected

You never know what life will bring. It’s important to make sure that you’re taken care of before you distribute your assets to loved ones. Make sure that you seek out an attorney that can help you navigate the multiple avenues of estate planning so that you can live with peace of mind and security. 

 

Heidi S. Webb Attorney at office

Heidi S. Webb Attorney at Law is an estate planning and small business attorney serving clients in Daytona Beach, Ormond Beach, Port Orange, and surrounding areas. Contact Heidi today for a free consultation: (386) 257-3332.

Law office located on the 3rd floor of the historic Kress building on Beach Street in Daytona (handicap accessible).