Mistakes to Avoid in Lifetime Giving – Part 2

We continue our series on mistakes to avoid in lifetime giving:

• Be aware of the Generation-skipping Transfer tax on any gifts that may involve your grandchildren.  These gifts can subject you to additional gift taxes that you may not realize apply when you make the gift.  Any gifts in excess of $13,000 to these beneficiaries should be discussed with your tax advisor ahead of time.
• Watch out for gifts where the donor still retains the right to use the property or have other certain powers.  In many cases, this asset will be included in their estate even though they “gifted” it away during life.
• If you gift life insurance policies, may sure not to delay.  If the person making the gift dies within three years of this transfer, the proceeds will be included in their estate.
• Be very careful with appointing yourself the trustee of any trust.  If the agreement is not worded properly or you retain too many powers over the trust, the trust value can be included in your estate.
• If a farmer wants to take advantage of the special use valuation on their farmland and their percentage is too low, consider making current gifts of cash or other assets to make your farmland qualify.

More to come ……

Paul Neiffer, CPA