Gifting may be part of your plan for the future, especially if you’ve accumulated wealth and are over the age of 65. However, no matter your age or giving plans, consulting an attorney before you sign a check or hand over a deed is of the utmost importance. Making a mistake in the timing or the amount of your gifts could result in negative consequences for you and the recipients of the gifts.
Plan ahead and consult an attorney to ease the burden on your loved ones, minimize the amount you pay in taxes, and ensure you have the resources to provide for your own needs. Read on to find out about common gift-giving mistakes and be sure to contact us so we can help.
Not planning for your long-term health needs.
Make sure you factor in the possibility of paying for long-term care in the future. As many as 70% of seniors will eventually require someone to help them with activities of daily living, like bathing, dressing, and feeding themselves. Whether this help comes through assisted living or you’re able to remain at home, it’s expensive. You wouldn’t want to give so generously that you have nothing left for your retirement or long-term care requirements.
Creating a joint account with a son or daughter.
Everyone wants to think the best of their family members, but not everyone is trustworthy. Even if you can trust your son or daughter to act responsibly, they may fall into circumstances outside of their control. If they lose their job or default on their mortgage, the bank may take the owed money out of your joint account. Plus, including one of your children in the joint account will give them control over the account, which could lead to issues with your other children after you pass.
Not factoring in federal estate and gift tax rules.
Limits exist for how much you can give to a person in a calendar year before you have to file a federal gift tax return, so it makes sense to plan ahead. An experienced attorney can help you plan for how much to give and when to give it.
Paying for a long-term caregiver “under the table.”
Paying for your caregiver in cash may sound like a win-win situation, but you are technically an employer with legal responsibilities. If the caregiver someday wants workers’ compensation or unemployment, you may become responsible for not only these payments but back taxes and even interest.
Gifting a piece of real estate to a son or daughter.
Real estate gifted within 60 months of applying for medical assistance will result in the transference being treated as a gift, meaning you will be penalized. Additionally, your son or daughter may be unable to transfer the property back if they are going through a divorce or bankruptcy.
Taking action without consulting an attorney.
The best way to decide when and how much to give to your loved ones is to ensure that your gifting works with your estate plan. Consulting an attorney is the first step you should take. The team at Friedman Elder Law Department can help you create a strategy to give as generously as you desire all while minimizing taxes and planning for your own future health and lifestyle needs.
Contact us today to meet with one of our team members to create a gifting plan that will work with your estate plan. If you don’t yet have an estate plan, we can assist with creating one!