Under the gift tax, certain amounts of money can be given as an individual or as a married couple without the consequences of direct taxes. Whether this was a formal part of your estate plan or not, it can be one way that you help to support children as well as move assets outside of your estate while you’re still alive.
If you have a plan to pass on assets to your loved one, you may be eligible to take advantage of the gift tax exclusion and pass on assets while you’re still alive to minimize the potential complications and tax ramifications. It turns out that one study recently conducted by Merrill Lynch indicates that up to 48% of Americans at least aged 50 will overextend themselves financially in order to assist adult children with living a more comfortable life. The average amount the retirees are giving to their adult children is $6,800 per year.
Of those individuals who were passing on money to their loved ones while they were still alive, nearly 80% of them felt that it was the right thing to do. Half of those retirees felt that giving money to family members was something they had an obligation to do. When compared with other family members, it was the adult children who came out receiving the most from a retired loved one when compared with parents, siblings and grandchildren. If you have intentions to pass on assets to a future generation or if you have questions about the best strategies for doing so, you need to consult with an experienced estate planning attorney as soon as possible.
Various strategies can help you accomplish all of your estate planning goals, even giving to adult children in a way that is responsible and minimizes tax consequences.