In the world of estate planning, the ultimate goal is always to dispose of all of your wealth in one form or the other. Whether you do that through lifetime gifts or through bequests at the time of death will depend on a number of factors. Both gifting now and bequeathing later have their advantages and disadvantages. Consider the following reasons why you may want to leave some assets to be transferred at the time of death.
- If you have an asset that has appreciated considerably since the time you purchased it, such as a home, you may want to wait to pass it down at the time of death. If you gift the asset now, the beneficiary will face capital gains taxes at your cost basis when he or she goes to sell the asset in most cases which could subject the sale to a huge capital gains obligation. If it is inherited though, your cost basis is not used when the asset is sold.
- If your beneficiaries are still very young then gifting assets now may be entirely impractical
- Likewise, even if your beneficiaries are adults, they may still not have the maturity to handle valuable assets. Waiting until the time of your death may give them the chance to mature to a point where the asset will be better managed.
- If gifting now will create discord in the family, then from a self-preservation standpoint, you may prefer to put it off until you will not be around to have to deal with it
- How Will You Age in Place and Be Able to Die at Home? - August 16, 2020
- Beneficiary Designations and Other Non-Probate Transfers - August 15, 2020
- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020