February 05, 2014
What are the nontax advantages of making lifetime gifts?
You see the recipient enjoy your generosity
Lifetime giving allows you the immediate satisfaction of seeing the recipient (the donee) enjoy your generosity. For many people, this is the most important reason for gifting.
You give your children financial independence
Most parents want to see their children enjoy the best possible life. Lifetime gifts to your children allow you to help them achieve financial security and a more worry-free life.
You are relieved of property management worries
Giving away your property can relieve you of the responsibility of managing that property, allowing you to enjoy a more worry-free life. This may be especially important if you are an older person.
You control the distribution of your property
Giving away your property while you are living allows you to decide who receives what property. If you die without a will, the intestacy laws in your state will determine how your property is distributed and you will have no say. You express how you want your property distributed after your death by executing a will. However, since you won't be around to see what actually happens (e.g., someone may disclaim your gift), you won't be able to react to any change in circumstances. Lifetime giving allows you to adjust your gifts to changing circumstances and, at the same time, provides the most control over how your estate is distributed.
You keep the property out of probate
Lifetime gifts can reduce probate and administration costs because property you give away during life generally is not included in your probate estate at death. Additionally, removing property from your probate estate keeps it from being vulnerable to estate creditors or unhappy heirs.
You keep the gift private
Lifetime gifts are not open to public scrutiny, unless, of course, you wish to make them so. In contrast, a will becomes a public document, available to anyone who wishes to see it. Lifetime giving assures your privacy.
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