{"id":554,"date":"2014-07-23T10:40:36","date_gmt":"2014-07-23T17:40:36","guid":{"rendered":"https:\/\/shellyrobersonrealtor.com\/?p=554"},"modified":"2014-08-30T08:35:22","modified_gmt":"2014-08-30T15:35:22","slug":"to-gift-or-devise-that-is-the-question","status":"publish","type":"post","link":"https:\/\/shellyrobersonrealtor.com\/to-gift-or-devise-that-is-the-question\/","title":{"rendered":"To Gift Or Devise, That Is The Question!"},"content":{"rendered":"

\"inheritance3-2_s600x600\"<\/a><\/p>\n

Tax and Estate Planning is Critical to Avoid Unnecessary Tax Burdens and Consequences<\/h1>\n

I have clients ask me all the time if it makes sense to give their property to their kids or should they wait to die and let their kids inherit it.\u00a0 The practical answer from a tax planning perspective is to allow the property to transfer at the time of death.\u00a0 If you haven\u2019t spent any time planning your estate or your property succession strategy you should sit down and think about how you would like things to pass, and who should be the recipient of the properties.\u00a0 If you have a substantial estate with multiple properties chances are you already have done this, if not an estate planning or trust attorney can help you through this process.\u00a0 Planning now can prevent unnecessary taxes or burdens being placed on your loved ones.<\/p>\n

<\/p>\n

Gifting a Property Has Unnecessary Tax Consequences<\/strong><\/p>\n

If a living parent gifts a piece of real property to their children the child receives the property with a tax basis the same as the parent.\u00a0 For example, if the parent purchased the home for $100,000 and at the time of the gift to the child the property was worth $1,000,000 the child would have a basis, for tax purposes, of $100,000.\u00a0 In California, if the child were to sell the home at that time they would have a capital gain of $900,000 and would have to pay capital gains taxes of 33% on the $900,000 of approximately $297,000.\u00a0 That wipes out about 1\/3 of the value and frankly doesn\u2019t make much sense.<\/p>\n

\"Tax_planning\"<\/a><\/p>\n

Devising a Property Has Tax Benefits<\/strong><\/p>\n

If a living parent devises, or wills a piece of real property to their children at the time of the parent\u2019s death, the child receives the property with a \u201cstepped-up\u201d tax basis of the value of the property at the time of the parent\u2019s death.\u00a0 For example, if the parent purchased the home for $100,000 and at the time of the death of the parent the property was worth $1,000,000 the child would have a basis, for tax purposes, of $1,000,000.\u00a0 In California, if the child were to sell the home at that time they would have a capital gain of $0 and would have to pay $0 capital gains taxes.\u00a0 From a tax planning perspective this scenario makes much more sense than gifting the property to the child.<\/p>\n

\"Tax<\/a><\/p>\n

Tax and Estate Planning is Key to Long-Term Wealth Creation<\/strong><\/p>\n

If you and your family has accumulated multiple properties, stocks, bonds, and other investment vehicles such that your family net worth is more than a few million dollars it is paramount that you consult with a \u00a0tax planning professional or trust attorney.\u00a0 There are dozens of tax planning and investment strategies designed to allow your family, your children and your grandchildren to benefit from your hard work well into the future.\u00a0 Without properly planning your estate, your children, and your grandchildren could end up being burdened with tax consequences which were completely avoidable.\u00a0 \u00a0If you need a referral to a professional who can help you in this area please don\u2019t hesitate to contact me anytime.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Tax and Estate Planning is Critical to Avoid Unnecessary Tax Burdens and Consequences I have clients ask me all the time if it makes sense to give their property to their kids or should they wait to die and let their kids inherit it.\u00a0 The practical answer from a tax planning perspective is to allow…<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[133,129,12,120,124,134,137,139,17,138,117,121,116,136,132,115,119,128,118,123,130,131,122,135],"tags":[74,45,73,31,77,72,71,76,75],"yoast_head":"\nTo Gift Or Devise, That Is The Question! - shellyrobersonrealtor.com<\/title>\n<meta name=\"description\" content=\"To Gift or Devise, that is the question. 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