Family gifts come in many forms and are made for various reasons. If they are of substantial value, care should be taken to avoid regrets or problems thereafter. Major gifting should also be considered in light of future life care and estate plans. Some of the issues to consider include:
- Loan or gift. While it can be both or part of each, the donor’s intention needs to be clear.
- Immediate or delayed delivery. When and how will the gift be complete?
- Cash or property. Whether both or some of each, can the recipient maintain the property without adequate income?
- Tax consequences. Substantial gifts may require value confirmation and a gift tax return filed by donor.
- Proper documentation. To avoid later disputes and estate confusion, document the gift and preserve the document.
- Donee Concerns. Will the gift upset the recipient’s rights to entitlements?
- Restricted Gifts. Will the gift have any restrictions on use or inheritance?
- Recapture. Will the donor be able to use or claw back the gift if needed?
- Estate plan. Will the gift disrupt or supplement the donor’s existing estate plan.
- Enforceability. Can the gift be challenged by your heirs after death?
- Retained rights. Does the donor retain any rights in or impose restrictions on the gifted property?
- Loan forgiveness. Document the gift of loan forgiveness.
- Competency. Document the donor’s authority and competency to make the gift.
If you are considering gifting to a family member or others, please contact us with any questions or issues.