One suggestion many wills and trusts lawyers tell people is to begin giving away assets as they age. If you are in your 60s and have a lot of net worth, giving assets to your children at this point could offer benefits. These benefits are not only good for your children, but they can also be good for tax purposes and money savings. Here are several things to know about this.
There are limits
The first thing to understand about this is that you can only give away a certain amount to each child per year and in all. For 2016, you are able to give each person up to $28,000 in cash or assets without having to pay taxes on the gift. If you stick within this limit, neither you nor your children will incur any tax liability on the gift. The limits change each year and are set forth by the Internal Revenue Service (IRS), and a lawyer can help you better understand them.
The purpose of doing this
There are several reasons to give your children assets before you die. The first reason is to simplify the process of dividing your estate after you die. If you do not do this, it can take time for a lawyer and court to work through your estate. This means it may take time for your assets to be properly transferred to each of your children.
Another good reason people do this is for protection. If you end up with a serious illness or need help taking care of yourself, you might end up in a nursing home at some point in your life. If you have a lot of cash and assets, the money will be used to pay for your nursing home care, and this could leave your children with nothing.
There are time frames
One of the main things your lawyer will help you with is knowing when the right time to do this is. If you do this too soon, you may be afraid your children will squander away the things you give them. If you wait too long, the assets you give away might cause problems with your nursing home coverage. Medicare is a type of insurance that will cover nursing home care if you do not have a lot of cash to use; however, there is a lookback period. This means that if you give away assets right before going to a nursing home, it may appear that you are attempting fraud. Because of this, Medicare might not offer coverage immediately for your care.
If giving away assets prior to your death is something you are interested in doing, you should talk to a lawyer that specializes in wills and trusts. He or she can give you the best advice for your situation. Contact a firm like Donald B Linsky & Associate Pa for more info.
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