As long as the estate tax is with us, people will look for ways to avoid it. There are all kinds of different ways to accomplish this.
Some of these ways work better than others, depending on the size of the estate and other potential issues.
One common strategy is to give your assets away before you pass away. If they are not in the estate, then assets cannot be subject to any estate taxes.
This is known as gifting.
Many wealthy people decide to implement gifting plans to get around the estate tax. Others do not out of fear that giving assets to younger family members could lead to problems, such as younger people wasting the money or becoming disincentivized to make their own money.
There are ways around those problems, as Private Wealth discussed in "Purposeful Family Gifting."
The idea is a fairly simple one.
You can give gifts as a way to incentivize younger people to do good things. For example, a gift of cash could be conditioned on someone needing to graduate from college or hold a job for a certain period of time, before they will receive the cash.
The options are nearly limitless.
If you tell someone they can get a gift of cash if they do something, then within reason you can incentivize your family to do many good things.
If you are interested in a gifting strategy, talk to an estate planning attorney.
There are limits and tax implications to be aware of, before starting to give gifts.
The Petrosewicz Law Firm can assist you with your estate planning needs. Contact us today at (281) 344-9455 or [email protected].
Reference: Private Wealth (July 19, 2017) "Purposeful Family Gifting."
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