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Passing Out Some Of Your Estate BEFORE You Die

Updated: Jan 4, 2023

In my travels through this life, I get to meet some of the most amazing, kind, loving, and generous folks. This year, a few of my elderly clients got the idea that they wanted to see others blessed with some of their inheritance before they die. Thus, they figured out how much they could let go of and still leave enough for emergencies such as long-term care, etc. In all cases, the amount going to each child was in the multiple hundred thousand range.

Before they wrote any checks, they first wrote love letters to each child, telling them of special things they had accomplished, how special and precious they were, etc. Then in most cases, they delivered the “gift” and “love letter” in person. Almost all were done as a surprise. They then spent some time visiting, etc. and listened to the excited speculations on what would be done with the money. In most cases, it would be first used to pay down or pay off their mortgages. Leaving the normal monthly mortgage payment to now be allocated to greater retirement savings in one way or another.

In one case, the giver knew the child was not able to handle a large sum of money. That they would use it unwisely and end up hurting themselves. In that case, they set up a Trust with specific rules the child must abide by before receiving any partial distributions. Usually, the distributions would not be in the direct form of cash, but instead to purchase something, such as a new car, or a down payment on a house, etc.

In all these cases, the giver will need to file a simple “Gift Tax Return.” The giver is actually not ending up paying any tax, just informing the IRS that they are using up a portion of their life-time credit. Currently set at $12,060,000. This also benefits the recipient of the gift, if the IRS should ever wonder where they suddenly came up with all that additional cash. The gift is NOT taxable to the recipient. They don’t even have to report it anywhere.

Anybody can give any amount to anybody else. In fact, the law this year allows a person to give up to $16,000 to another person and not have to file a “Gift Tax Return.” So, if you and your spouse wanted to help out a child and their spouse in some way, you could actually give up to $64,000. ($16,000 from each of you to your child and an additional $16,000 from each of you to their spouse.) That might be enough for them to use as a down payment on a house, or to purchase a new family mini-van. (After all, you want your grandkids to ride in a safe vehicle, right?)

I leave you with one last idea. Having a “wake” or “memorial service” before you die. Think about it. Everybody would try to come to your actual funeral or memorial service. They would get up and say all kinds of wonderful memories. Why not be in the audience to hear all those warm thoughts and get to see all your family? My in-laws did this a few years ago. (They’re in their 90s) In fact, they did indeed have a great time and all the family showed up. Their oldest son came from out of town to this “memorial service” and said a lot of kind things about his parents. They never would have heard that since he has since passed away.

Have you heard? Proverbs 13:22a says, “A good man leaves an inheritance to his children’s children…”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at Also on Facebook.

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