Should You Give an Early Inheritance to Your Loved Ones?

What does your estate plan look like? If you’re like most people, you probably have a will directing the distribution of your assets to your heirs. You may even have a trust that provides more specific instructions. Perhaps you have end-of-life documents, such as a power of attorney or a living will.

But do you have a plan to gift assets to your children, grandchildren or even your favorite charities? The idea of gifting, or early inheritance, is becoming more popular. A recent Merrill Lynch study found that 60 percent of people over the age of 50 prefer to give assets away early rather than after death.1

Obviously, a gifting strategy can have clear benefits for your heirs and loved ones. But it can also be beneficial to you and your estate. Below are a few reasons why you may want to make gifting a part of your estate strategy:

Family Assistance and Support


There’s one clear benefit to giving your assets away today instead of doing so after you pass away: You get to see your heirs put your assets to work. Maybe you have a grandchild who’s been accepted to a top-tier college but can’t afford the tuition. Perhaps you have a child who has a great business idea but needs resources to make it a reality. Or maybe you just want to help your loved ones reach their biggest financial goals.

A traditional inheritance is always helpful to the heirs and recipients, but you don’t get to see how your legacy impacts their lives. There also may be a greater need for the resources today than there will be in the future. You can meet both of those needs by incorporating gifting into your estate plan.

Probate Issues


Believe it or not, gifting could also potentially benefit your estate. When you pass away, your estate goes through a process called probate. This is the legal process for settling an estate, and it usually includes activities such as paying debts, filing taxes, selling assets and much more.

Depending on the size and complexity of your estate, probate can be a lengthy and costly process. Your heirs may need to hire lawyers, accountants and others to handle many of these tasks. The distribution of your assets could be delayed for a significant amount of time.

When you give away assets in advance, you remove them from your estate. That means you may have fewer assets going through the probate process. That could reduce the complexity and ultimately the cost, which could help your estate pass through probate more quickly.

Important Considerations


Gifting isn’t always as straightforward as simply writing a check to your loved ones. There could be tax implications to your strategy, so it’s important to consult with a professional.

For example, the IRS taxes gifts that exceed $15,000 to any one individual in a given year. Married couples can gift as much as $30,000 to an individual in a year.2 If there’s a chance your gifts could exceed that level, you may want to develop a strategy to minimize the tax exposure.

Even if your gifts won’t come close to the gift tax threshold, it’s still wise to develop a plan. There may be more efficient ways to distribute your estate than simply by writing checks. You may have some loved ones who need help and guidance with managing the money. It may be more effective to gift assets instead of cash. These are all decisions and choices you can make when you develop a gifting strategy with your financial professional.


Ready to see how an early inheritance could work as part of your estate plan? Let’s talk about it. Contact us today at Peak Financial. We can help you review your needs and goals and develop a strategy. Let’s connect soon and start the conversation.





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