Parents who want to avoid disputes after their passing have at least one great option that they can use to do prevent them. It’s a simple solution: giving gifts while they’re still alive.
While parents may want to leave inheritances to their children, it’s a good idea to consider giving financial gifts (or assets) to their children while they’re still alive. Doing this makes it clear what their intentions are and that they are providing a certain gift to a specific child.
In 2020, an individual could give up to $15,000 as a gift and be excluded from paying the gift tax. Additionally, spouses can each give $15,000 to a single recipient, which means that a couple could give up to $30,000 of cash or other gifts to their child, friend or relative annually without tax.
For parents who want to minimize the risk of arguments after their passing, giving away assets this way can be beneficial. That’s not even considering the fact that giving gifts like this reduces the value of the total estate, so that there is a lower chance of having to pay estate taxes.
What if you don’t want to give gifts (or can’t) during your lifetime?
If you are a parent and can’t give gifts now, it may be a good idea to tag items and to provide a letter with your instructions. A letter of instruction is easy to make, and it quickly reduces confusion. For example, you could list out the major assets and put your children’s names next to those that you’d like them to receive. This eliminates any risk of one child believing that an asset was meant to be theirs.
Tagging smaller items could help, too. Adding a tag on the bottom of an expensive vase or on a jewelry box will help you make sure that your children know whom you want that asset to go to. Some people might think this seems tacky, but the truth is that anything that makes your wishes clear is a good way to reduce the risk of conflicts breaking out.
If you’re concerned about conflicts, it’s smart to talk to your attorney about ways to reduce them or prevent them from happening. Your kids can get their inheritances without there being a fight over what remains.