Family Gifts — Keep Goals in Mind

One of your estate planning goals may be to pass along wealth to your children and grandchildren. Before you choose a strategy for sharing your wealth, you’ll want to think carefully about the issues involved and your own expectations for recipients.

Gifts in the Present

You may want to begin passing some of your wealth on to loved ones during your lifetime. For 2017, you can give up to $14,000 ($28,000 if your spouse joins in the gift) each to as many individuals as you want free of federal gift-tax consequences. The gift-tax annual exclusion allows you to make gifts of cash, securities, real estate, or other property to anyone you wish. If one of your goals is to encourage recipients to build wealth on their own, making smaller gifts during your lifetime may help them do so.

Gifts with Stipulations

You also may want to consider connecting an inheritance to an event or specific achievement of a loved one. Setting up a trust and naming a trustee to oversee the trust arrangement allows you to stipulate when and under what circumstances your loved one will receive the inheritance. For example, you can specify the age a beneficiary must attain before he or she receives the funds. Or you may want to tie the inheritance to a milestone in the person’s life, such as earning a college degree, starting a first job, or some other endeavor.

Gifts and Values

Another option is to link an inheritance to charitable work or community service. Using a gift or inheritance to promote values that you consider important can foster similar values in your beneficiary.

Think Ahead

Before you begin making lifetime gifts, consider your own financial situation. Make sure you’re confident that your remaining assets will be adequate to maintain a comfortable lifestyle in the future. If you’re not sure, you may want to reconsider your strategy.

FR2017-0504-0006/E