When many people are focused on estate planning, they are merely thinking about the future. They write a will describing which heirs and beneficiaries should get specific assets when they pass away. They will then wait for that day, and the estate executor handles the plan after the person who created it dies.
But you may be wondering, as you work on your own plan if there would be any benefit to giving assets to your heirs in advance. There are some ways in which this may be helpful.
For those with very large estates, giving away assets in advance can lower the taxable value of the estate. This way, people can sometimes save money, at least in the sense that they are transferring a greater portion of their assets to their heirs and less of it to the state.
For some types of assets, the value shifts frequently. An example could be a family home or a vacation home. If the value is going to increase in the future, that can trigger additional taxes. So giving the property to someone else when the value is lower could be beneficial to both of you.
Preventing estate disputes
Finally, giving away money in advance or transferring assets before you pass away can be a way to limit estate disputes. Heirs will sometimes dispute what you really would’ve wanted when they just have to read the will. But if you take these steps before you pass away, they know that it’s what you really wanted and you are there to answer questions or address concerns. The heirs do not have to have a dispute among themselves.
There are many different tools people can use when making an estate plan. If you’re interested in this process, be sure you know what steps to take.