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Don’t Just Add Your Children’s Names To Your Assets And Call It A Day: A Tax Accountant’s Plea
Plea Of the two things that are certain, which one is scarier, death or taxes? While fear is a subjective emotion, so there is no answer to that question but there is an answer as to which one you can fix by thinking about it and taking action. There is nothing you can do to become immortal, even if you do end up joining the growing ranks of supercentenarians, but decisions you make now and in the future can have a major effect on the taxes you and the beneficiaries of your estate will have to pay during your lifetime and during probate. While Hillsborough County estate planning lawyers recommend setting up your estate plan to keep as many assets as possible out of probate, they do not recommend transferring assets to your children now and considering your estate plan complete, although the IRS will be licking its chops if you do this.
Penny Wise and Pound Foolish
If you skim an estate planning law blog, you will read that sharing your wealth with the beneficiaries of your estate will save everyone money on taxes and is more emotionally satisfying. This is true, but do not think that you are being clever by simply adding your son as an owner on your bank account, brokerage account, and house. (This post assumes that your son is an only child. The effects are just as bad if, in your laziness, you gift the white elephant of your worldly possessions to more than one grown child. Maybe it’s even worse, as it could cause the siblings to turn on each other.) If you do this, he will end up paying tens of thousands of dollars in taxes, if not more, and he would have reason to feel that you threw him under the bus just to save a few hundred dollars on estate planning lawyers’ fees.
Let’s say that you add your son as a joint owner of your bank account. If the account has more than $30,000 in it, he will have to pay gift taxes on half of the balance of the account. If your aim is for him to have access to the money in your account starting now, write him a check for $15,000 or less each year; this way, the annual gift tax exclusion will protect both of you from paying taxes on the cash gift. If your aim is for him to manage your finances when your health requires this, then a better idea is a durable power of attorney.
Likewise, if you simply add your son’s name to your brokerage account, he will get hit with a huge capital gains tax bill. If your son needs the money now, withdraw some of it and give it to him. If not, make him a payable on death beneficiary. The capital gains tax problem also applies to real estate. The best solution for real estate is a revocable trust, unless your son wants to move in with you now.
Contact an Attorney Today for Help
Meeting with a Tampa probate lawyer now is better than letting your wealth become an albatross around the necks of your children. Contact David Toback for help today.
Source:
floridatoday.com/story/news/2021/05/20/estate-planning-if-you-take-lazy-way-out-someone-pays-price/5187551001/
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