Question

Estate Planning Chapter 5

List 3 advantages of Life time gifts and one advantage of transfers at death.

Answer 1

• Life time gifts:

Life time gifts are always valuable to our family or friends. Life time gift is something you gift in your lifetime, when you are live, it is transfer of wealth to other person in your life time not after death.

Advantages of Lifetime Gifting:

Gift tax advantage:

In every country there is some exemption on amount of gift every year. One can plan and gift their wealth to other by keeping in mind the limit and can enjoy tax benefits, but for that one must have sufficient knowledge about gift tax.

Financial security and independence to Receiver:

The person who is transferring his or her wealth to spouse, children or any other family member or friends, he or she can enjoy their loved ones happiness and financial independence in their lifetime. Sometimes that bigheartedness matters the most for the Giver.

Distribution of wealth:

The donor can distribute the wealth by life time gifting among their family to avoid any problem in future after death to their family. Distribution also helps to reduce tax over capital gain by appreciation of wealth in future on one person. And by gifting, one can live free life without any worries and tension to manage personal wealth.

• Transfers at death:

This is one form of gifting your wealth after death. Here one can prepare transfer on death deed to distribute personal wealth to others immediately after death.

Advantages of transfers at death:

Lifetime enjoyment of personal wealth:

When one decides to transfer personal wealth after death, then he or she can enjoy that for lifetime and also can live independent and secure life, for many people wealth is biggest security to live their life peacefully, one can have full control over personal wealth and can manage it as per personal choice.

Hassle free transfer after death:

If person who do not want to give away personal wealth in their lifetime, transfer after death can be the best option to distribute wealth after death, with this receiver do not need to go to court for any long legal process and can receive control over wealth immediately after death of owner.