Gift Planning: One Arrow in your Estate Planning Quiver

Typically, when one thinks of a gift they think of a very simple exchange involving wrapping paper (which in my opinion can actually be pretty complicated) and maybe some cake. However, when considering gift giving as a strategy within an estate plan, the concept of a gift takes on a variety of complications. Though this post will do little to dive into these complex issues, it is important to make sure one considers important questions that should be addressed before implementing gift planning as part of an estate plan. Most of these questions will be taken up in future posts, but for now let’s simply pose them for consideration:

Are you indeed giving a gift? Or is there something you are expecting in return for your “gift”?

Who will benefit from receive the gift? Who will benefit from the gift?

What is the value of the property to be gifted?

When will the gift be made? Or, in other words, when will the giver of the gift relinquish all ability to change the beneficial ownership of the transferred property?

What assets are available to you to care for yourself once the property has been gifted?

Will taxes be paid for the gift at the time it is given, or deferred until death?

What is the nature of the interest to be given, possessory, future, etc.?

Some of these questions are more complicated than one may initially be inclined to think. Some, though not complicated, are still crucial to consider as part of an effective estate plan. Gift planning plays a significant role in maximizing tax benefits before or at death and, for this among other reasons, is a noteworthy technique utilized by estate planning practitioners.


Image by: Horia Varlan