While planning your estate there are some considerations you should make about making gifts to your loved ones. Gifts allow you to transfer your wealth to family while you are still living. Giving assets as gifts is a great way to see your loved ones reap the benefit of the gift while you are still alive. It may also help them avoid paying certain federal estate taxes if they were to receive the asset after your death. As your experienced estate planning attorneys, we can help you understand any potential ramifications from gifts made during your lifetime.
Ultimately, making a gift now will reduce the amount of your taxable estate once you are gone. We will help with decisions regarding gifts to your loved ones or to charitable organizations. We will work hard as your estate planning attorneys to help you determine what is best for your circumstances.
Contact us for your free quote at (888) 211-5798.
Estate Planning: Types of Gifts
When making a gift to someone there are different options you have to explore. Some of the different types of gifts are outright gifts, gifts in trust, or deeding of property.
Outright gifts are the most obvious type. These are made directly to an individual where he or she is given complete control over the asset. You no longer have claim on the asset once an outright gift is made to someone.
The next option you have is to make a gift in trust. These allow you to promise a piece of property or money ensuring it does not have to pass through probate court after your death. Our team can handle all the necessary paperwork and can draw up the terms of the trust. These gifts can be made to individuals or to charitable organizations. We will review the different types of charitable trusts that exist to help you decide the best gift option for you.
Another gift type is through the passage of property. There are different options to have property transferred to another person. Simply adding someone’s name to a property through the use of a quit claim deed or a similar document gives you the ability to gift real estate while you are still alive. While working as your legal counsel, we will explore the different options you have for gifting property with you.
Estate Planning Gifts: Tax Ramifications
When gifting something to someone you may be liable to pay the gift tax under federal law. The good news is there is a lifetime exemption of how much you can give away of $5 million. The exemption was made into law under the 2010 Tax Relief Act and was created to help reduce the estate tax to be paid after you pass away.
The gift tax does not currently start until the value of the property or money exceeds $14,000 as of 2016. Once the value exceeds the amount you will need to file a gift tax return with the IRS. In addition, there are some gifts that fall under exceptions to the gift tax. These include money used to pay medical expenses or tuition.
Also, if you gift items to your spouse he or she will not be required to pay the gift tax. The amount excluded from the tax can vary from year to year, so as your estate planning attorney we can help you understand what gifts may add up towards the $5 million lifetime exemption.
Even though smaller gifts do not need to be reported to the IRS, under Michigan law you will need to report gifts to the Department of Health and Human Services. The reason these gifts must be reported is to help avoid any healthcare Medicaid fraud.
There is a lookback period for gifts made to relatives of five years when you are in need of nursing home care. Since benefits are based on your income levels, the state could deny long-term care Medicaid benefits to you for a specific period of time-based on the value of past gifts. Our legal team can help you understand the lookback period and can help you plan for your care accordingly.
Gift Giving in Michigan
The estate planning team at Grewal Law PLLC is ready to help answer any questions you have about gift giving and your estate. We will help you analyze any possible tax ramifications while looking at the different gift options available to you.
Our Michigan estate planning attorneys at Grewal Law PLLC will provide you with a no obligation quote related to making gifts. Call our team at (888) 211-5798 today.