It is in your best interest to be generous to your children before you die. If you do not, your family will lose a large portion of your hard earned wealth to the IRS after your death. There are many ways to give property or cash to your children. Here are three such legal methods.
Gift tax exemption and outright gifts – Under IRS law you can gift $14,000 yearly to your children without any tax consequences. This value is increased to $28,000 if your spouse is still alive. These gifts do not have to be cash; they can also be gifted in the form of cash assets, the value of property, or stocks and bonds.
Sale and debt forgiveness – You could also “Sell” your property to your children as a legal note. This note is drafted and you are titled as the person changing the deed to your children’s names. After which every year on a set date the debt is forgiven by $28,000 and this continues till the property value is complete and the deed is transferred to your children’s names.
Additional giving exceptions – You can provide further funds in the form of educational and medical expenses to your children. According to the IRS, these funds are unlimited and tax-free, if directly transferred to the medical or educational institution.
Annual gift tax exclusion is a complex area and should be entered with the guidance of a professional attorney.