Elder Law with Frank and Mary: Give away what you don’t need; plan for the rest

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The holiday season is right around the corner. If you are trying to think of that perfect gift for the loved one who doesn’t need anything, consider this: 

  • GIVE SOMETHING YOU OWN. Instead of waiting to distribute that special jewelry or nostalgic painting after your death, give it away now. You’ll get to hear “thank you,” and know that your precious items will be appreciated.

  • GIVE MONEY, NO MATTER THE AMOUNT. There is nothing financially disadvantageous about gifting money. There is no Massachusetts gift tax. The federal gift tax only applies if your total lifetime giving exceeds the federal estate tax threshold (currently over $11 million). Your children will not pay any income tax on the money. The added benefit of doing this before you die is that it will probably decrease your taxable estate and, therefore, reduce any estate tax that might be owed.

  • IN GENERAL, don’t give away stock, real estate, or other assets that have appreciated in value since you bought them. By saving these until you die, you will probably be saving the recipients more in capital gains tax than your estate will save in estate tax. Talk to your tax advisor or attorney about this.

If you are thinking about making a gift to a church, school, or charity, this is a good time to make that gift, or add it to your estate plan. Bequests to nonprofits are subtracted from your taxable estate, thereby reducing your estate tax. Furthermore, if you give the charity tax-deferred funds at your death by naming it as the beneficiary, the charity will not pay income tax on the funds. 

If you want to learn more about this topic, check out Frank and Mary’s YouTube channel, youtube.com/elderlawfrankandmary, and your local cable station, MVTV, for the Frank and Mary TV show, where my co-host, Sandie Corr-Dolby, and I address many common issues facing seniors, and the resources available. 

Arthur and Leah are elder law attorneys in the trusts and estates group at Mirick O’Connell.

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