ABA Family Legal Guide

Estate Planning

Other Estate-Planning Assets and Tools

Should I give some of my property away before I die?

Making gifts during your lifetime can be a good idea, especially if you have a large estate. They can help you avoid high estate and inheritance taxes. In some states, they might enable you to reduce an estate to one that is small enough to avoid formal probate procedures. Another advantage of giving property away before you die is that you get to see the recipient's appreciation of your generosity.

But watch out for a few pitfalls. These gifts will be subject to gift taxes if they're larger than the amount provided by law. Current law allows you to give up to $12,000 per person per year ($24,000, if a couple makes the gift) before the gift tax applies. You can make gifts to any number of people, whether related to you or not. You can also make gifts to trusts, but keep in mind that not all trust gifts qualify for this exclusion.

You need to put in your will a statement that any gifts you have made before you died are not to be considered advances. Without such a clear statement of intent, the probate courts in some states may subtract the amount of the gift from the amount you left in the will.