When it comes to transferring property, individuals often face the dilemma of whether to gift it during their lifetime or include it in their estate plan for distribution after their death. Both options have their advantages and considerations, making it essential to consult with a knowledgeable Florida probate lawyer to determine the best course of action for your unique circumstances.
Gifting Property During Life
One option is to give a property as a gift to loved ones during your lifetime. There are several benefits to this approach. Firstly, gifting property allows you to see the impact of your generosity firsthand and enjoy the satisfaction of helping your loved ones. Additionally, gifting can reduce the size of your estate, potentially reducing estate taxes upon your death. Keep in mind, while Florida doesn’t have a gift tax, you may trigger a federal gift tax if you gift over $17,000 per individual (as of 2023). So for e.g. if you have 5 children, you can gift $17K each which means $85K would be removed from your estate tax-free. The lifetime gift and estate tax exemption limit is $12.92Mi per individual and $25.84Mi per married couple.
However, the gifting property also has potential drawbacks. Once you transfer ownership, you relinquish control over the property, and it becomes the recipient’s asset. If the recipient faces financial difficulties, divorce, or bankruptcy, the gifted property may be at risk. Moreover, if the property has appreciated significantly, the recipient may face significant capital gains taxes upon selling it.
Transferring Property After Death
Another option is to include the property in your estate plan and transfer it after your death. This is often done through a will or a revocable living trust. One significant advantage of this approach is that you retain full control and ownership of the property during your lifetime. You can continue to use and benefit from it as you wish.
Furthermore, transferring property through an estate plan provides an opportunity to implement safeguards and conditions. For example, you can establish trusts to protect the property for minor beneficiaries or individuals with special needs. You can also include provisions that dictate how the property should be used or managed.
However, transferring property after death may subject it to the probate process, which can be time-consuming and potentially costly. Probate is the legal process of administering a deceased person’s estate, ensuring debts are settled, and assets are distributed according to the will or state laws. Working with a skilled Florida probate lawyer can help streamline the process and ensure your intentions are carried out smoothly.
Another aspect to consider when transferring property after death is the tax implications. For 2023, there is a 40% death tax on any estate exceeding a taxable value of $12.92 million or more. While this limit is not a concern for a vast majority of individuals, it is important to note that these values are regulated by the IRS and they can and do change every year. E.g. the limit for 2015 was $5.43Mi and for 2010, it was just at $1Mi. This variability necessitates estate planning.
Choosing the Right Approach
The decision between gifting property during life or transferring it after death depends on various factors, including your personal preferences, the nature of the property, and the needs and circumstances of your beneficiaries. Consulting with a Florida probate lawyer is crucial to fully understand the implications of each option and make an informed decision.
Whether you choose to gift property during your lifetime or include it in your estate plan, the guidance of a Florida probate lawyer is invaluable. They can help you navigate the legal complexities, minimize tax implications, and ensure your wishes are protected and carried out effectively.
In conclusion, the choice between gifting property during life or after death is a deeply personal one. It requires careful consideration of various factors and professional guidance from a Florida probate lawyer. By understanding the advantages and considerations of each option, you can make an informed decision that aligns with your goals and protects the interests of your loved ones.
For guidance on gifting property and estate planning, consult Michael T. Heider, P.A., your trusted Florida probate lawyer. Protect your assets and make informed decisions for the future.
