Gifting mistakes to avoid

On Behalf of | Feb 6, 2017 | Blog

Many Nevadans want to make gifts to their children during their lifetimes. Some want to help their children out while others want to help to avoid the possibility of estate taxes. It is important for people to understand some potential problems that can be caused if they do not handle the manner correctly.

Some people gift highly appreciated assets to their children such as stocks that have substantially increased in value since the purchase date. When they do, the children will have to pay capital gains tax on the increase at a future sale. Parents should instead gift their children assets that are not highly appreciated and pass those that are after their deaths because the basis then steps up to the value at death.

>Parents should also be careful about naming their children as joint owners of real estate. If the children have their own college-age children, it might make it difficult for them to qualify for financial aid if the homes are considered to be secondary residences. Parents should also avoid cosigning for mortgages without clearly outlining their expectations so that they don’t end up getting stuck making the mortgage payments for their children.

People who want to help to avoid estate taxes and to make gifts to their children may benefit by getting advice from an estate planning attorneys. Lawyers who are experienced with gift and trust planning may help their clients minimize some of the issues that could otherwise arise. They may suggest ways to use trusts to help their clients pass assets to their children in ways that help them to prevent their children from dissipating their assets or getting burdened by unnecessary taxes. They may also do so in ways that help their children still qualify for other things, including financial aid to pay for their children’s college educations.