Typically, our children are in the greatest financial need at the time they are raising a family. But if we expect to see our grandchildren grow, the inheritance we plan to leave for our children won’t be available until after they need those assets most. Given that people are living longer and longer, it doesn’t necessarily make sense to make our children wait to receive their inheritances. There can be an emotional benefit – and a tax savings – from giving assets to your children while you’re still alive.
For example, after decades of work, my Grandfather began to receive some patent royalties. Instead of putting those royalties into his own bank account, he put them into a trust dedicated to helping pay the college tuitions of his eight grandchildren. One benefit of setting up this trust was that the value of his gift was not eroded by gift, estate, or generation skipping taxes, because gifts of tuition are not subject to those penalties. In addition, even though my grandfather’s children were not direct beneficiaries of the trust, they greatly benefited from his gift because they were left with more of their income, during their prime working years, to spend on extras or put away toward retirement. And while my grandfather was alive he had the pleasure and satisfaction of seeing his older grandchildren graduate with the college degrees that his funding had helped us to attain.
For more information about the benefits of passing assets to your heirs during your lifetime, contact Christl@DeneckePlanning.com or see DeneckePlanning.com.
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