Should I Gift Assets During My Lifetime? 5 Key Questions to Ask First

Sabine Franco
Oct 10
2 min read

Gifting assets can be a powerful estate planning strategy to reduce taxes, support loved ones, and achieve your financial goals. However, it's essential to approach gifting thoughtfully to avoid unintended consequences. Before transferring property, money, or other assets to a loved one, consider these five critical questions:

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1. What Is the Purpose of the Gift?

Understanding the motivation behind your gift is crucial. Is it an expression of love, or are you aiming to achieve specific estate planning goals, such as reducing estate taxes or qualifying for Medicaid? If your goal is strategic, ensure the transfer aligns with your plans. Improper gifting can trigger up to five years of Medicaid ineligibility if not handled correctly.

2. Are You Retaining Sufficient Assets for Your Own Needs?

Before making a substantial gift, assess your financial situation. Ensure that the gift doesn't compromise your ability to cover future living expenses, healthcare costs, or other financial needs. Proper financial planning ensures your generosity doesn't put your own lifestyle at risk.

3. Is the Gift Truly a Gift, or Is It a Loan?

If you expect repayment or anticipate some form of return from the recipient, it's essential to clarify this upfront. Without proper documentation, such expectations can lead to misunderstandings or legal disputes. Consider drafting a formal agreement to outline the terms clearly.

4. Are You Retaining Control Over the Gifted Asset?

Gifting assets with the expectation of continued use or control can lead to complications. If you intend to live in a property after gifting it or want someone else to manage the asset on your behalf, consider using a trust. A trust allows you to maintain certain controls and protections over the asset.

5. Will the Recipient Benefit from the Gift?

Before gifting, assess your recipient's financial situation, legal constraints, or special needs. Gifts can unintentionally disqualify someone from government benefits or create financial challenges if the recipient struggles with debt, addiction, or other difficulties. Ensure that the gift will genuinely benefit the recipient and not cause unintended harm.

Consider a Trust

One of the most effective ways to transfer assets is through a Trust. This strategy allows you to:

Determine the timing of distributions for children or grandchildren
Teach heirs how to protect and grow the assets
Ensure your wealth benefits future generations responsibly

A Trust provides flexibility and control, ensuring that your assets are used in alignment with your values and goals.

This article is a service of The Ambitious Legacy Firm. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by using the link below to schedule a call with our Client Services Director, who will be able to guide you on scheduling your Legacy Planning Session.

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