Transferring Property To Your Children Outside Of Probate: What Not To Do
A large body of Internet content justifies its existence based on the assumption that taxes are for chumps. While estate planning lawyers certainly do not encourage tax fraud or tax evasion, they do help you benefit from laws that enable you and your heirs to pay lower taxes based on how you allocate your assets when you are alive. Some of the strategies that can help you reduce the estate taxes your heirs will pay involve transferring ownership of assets to your children while you are alive. Leave it to the Internet to recommend shortcuts and money-saving hacks for everything, and you can probably guess how well these shortcuts work. Just as drinking a glass of pomegranate juice per day does not cure cancer, simply adding your children’s names to your accounts and the titles to your property is not a substitute for estate planning. A Central Florida estate planning lawyer can help you keep your assets out of probate the right way.
What About Your Bank Account?
What not to do: simply add your son or daughter to your bank account, making it a joint account. If the account has more than $30,000 in it, then that means you will have gifted your child more than $15,000, which means that your child will have to pay taxes on it.
What to do instead: If your goal is to keep the bank account out of probate, list your child as a payable on death beneficiary. If you do this, your child will not have access to the account while you are alive and will not have any tax responsibility for it. If your goal is to give your children access to money, give them cash gifts in amounts lower than the annual gift tax exclusion (currently $15,000) or make them beneficiaries of a revocable trust.
What About Your Brokerage Account?
What not to do: simply add your son or daughter to your brokerage account, making it a joint account. If you do this, your child will have to pay taxes of half the amount of increase in value the account has undergone since you opened it.
What to do instead: List your child as a transfer on death beneficiary. The account will pass to your child outside of probate.
What About Your House?
What not to do: add your child’s name to the deed, so you are joint owners. If you do this, your child will have to pay a share of the property taxes and will pay taxes on the appreciation in the house’s value since you bought it. The only time when adding your child as a joint owner of the house is a good idea is if your child moves into the house with you.
What to do instead: Set up a trust and transfer ownership of the house to the trust. This requires the help of an estate planning lawyer.
Contact an Attorney Today for Help
Trying to make an estate plan without a Clearwater estate planning lawyer is penny wise and pound foolish. Contact William Rambaum for help with your case.