A common strategy to reduce estate taxes is to give away some assets before you pass away.
Gifting to younger family members can be used as a strategy to reduce estate taxes. However, it also comes with the potential for the recipients to become wasteful or lose their incentive to preserve assets. However, there are ways around those problems, according to Private Wealth in “Purposeful Family Gifting.”
The idea is a fairly simple one.
You can give gifts as a way to incentivize younger people to do good things. For example, a gift of cash could be conditioned on someone needing to graduate from college or hold a job for a certain period of time, before they will receive the cash.
The options are nearly limitless.
If you tell someone they can get a gift of cash if they do something, then, within reason, you can incentivize your family to do many good things.
An estate planning attorney can advise you on a gifting strategy that fits your goals and specific circumstances to create an estate plan.
Reference: Private Wealth (July 19, 2017) “Purposeful Family Gifting.”
