Ask These 5 Questions Before Gifting Assets

Gifting assets can be a useful estate planning tool if you need to reduce your estate tax bill or for long-term care planning purposes.  However, you need to be sure that your gift does not cause any unforeseen problems for you or the person receiving your gift.

Here are five questions you should ask yourself before gifting:

Why is the gift being made?  Are you making a gift out of love or is there some estate planning goal you are trying to reach?  If it’s the latter, you need to be sure that the transfer of assets will be beneficial to you and your recipient.  For example, if you are counting on Medicaid to pay for some of your long-term care, a gift could trigger up to five years of ineligibility unless handled correctly. Contact us or your own personal lawyer to evaluate your options.

Are you keeping enough for your needs?  If you are making a large gift, you will need to do some long-term financial planning to ensure your gift does not compromise your future needs.

Are you expecting repayment?  If your gift comes with an expectation on your part that you will be repaid, be sure your recipient understands that the gift is coming with these strings attached.  Execute a promissory note so all parties are clear on the terms of your gift.

Are you expecting something else in return?  If you are gifting property with the expectation that you will be allowed to live there, or gifting assets for someone else to hold for you, you should consider using a trust for these purposes instead.  If you don’t, the recipient is legally in control of the gift and if they don’t do what you want with it — or worse, your assets become entangled in a divorce or bankruptcy — this could cause huge problems for you.

Will the recipient benefit from your gift?  If your recipient has special needs, a gift could disqualify them from receiving important benefits.  If he or she has financial or other problems like alcohol or drug dependency issues, the gift could be detrimental.

One of the best ways for you to gift assets is through a Wealth Creation Trust, which allows you to decide the best time for children or grandchildren to receive your gift and gives them the necessary time and experience to learn how to protect and grow the assets in the trust for future generations.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

 

6 Cases When a Trust Is Better Than a Will in Texas

A will is one of the most basic Texas estate planning documents, and everyone should have one to make sure that there is no question about what would happen to your assets and kids if something happens to you.  But there are some cases when having a trust in addition to a will is imperative; here are six of them:

Avoiding probate or conservatorship.  A trust will bypass the probate process, saving the people you love time and money.  To carry out instructions in a will, a probate must be opened in the county court of Texas and that means your family is stuck dealing with the Court if you get hospitalized or after you die.

Providing for a person with special needs.  If you have a child or another dependent with special needs, a trust commonly known as a Special Needs Trust can protect assets for a special needs person without jeopardizing their qualification for government benefits.  A will allows you to transfer assets to a special needs person, but will not protect those assets.

Privacy.  Since a will undergoes probate in Texas, it becomes public record.  A trust is private.

Blended families.  If you are part of a blended family, a trust can give you the flexibility you will want to make sure that children from prior marriages are provided for in the way you want.

Out-of-state property.  If you own property in another state besides Texas, you can more easily transfer ownership via a trust than a will.  Transferring out-of-state property in a will usually means additional legal expenses because you could have probate in multiple states and that is no fund for the people you love.

Asset protection.  If you want to protect the assets you leave your loved ones from creditors (including bankruptcy and divorce) a trust is the way to do it. It’s a gift you can give your loved ones that they could not easily (or at all) give themselves.

If you would like to learn more about the use of trusts in Texas to pass on what you care about to the people you love, call our office today to schedule a time for us to sit down and talk.