In developing your estate plan, you will determine what will happen to your assets after you are gone. You may want to consider gifting some of your assets to your heirs while you are living.
In 2022, an individual can gift up to $16,000 of property to one person without any gift tax consequences. In some situations, a transfer of assets while living is beneficial.
Gifts of property expected to appreciate
If you have an investment that you expect will become more valuable in the future, you may want to consider transferring the asset before it appreciates to avoid future tax liability. The downside is that your beneficiary will control the investment and any future gains.
Transfers of property for asset protection
You may need long-term care as you get older. Long-term care costs can eat up all of your hard-earned assets in a short time. You may prefer that to transfer this wealth to your children or grandchildren. If so, you may want to consider gifting property in advance of any need for long-term care.
Under North Carolina law, a five-year look-back applies for any assets transferred for less than fair market value for purposes of determining your eligibility for state Medicaid funds. State Medicaid funds would cover your long-term care costs. If you want to protect your assets for your heirs, gifting is a good option.
You need to consider many factors when making your estate plan. Please get in touch with our law firm to discuss your options.