Gifting vs. Inheritance in Palm Beach County

Many Florida residents feel content knowing that their loved ones will inherit their assets. But what if you could distribute your wealth before you pass away? What if you could see the look on their faces when they received these assets? This raises an important question: Is it better to give gifts while you’re still alive, or have your assets distributed after you pass? This is a question you can raise during your first consultation with an experienced estate planning lawyer in Palm Beach County.

The Advantages of Gifting 

Gifting has many potential advantages. First, many people like the idea of giving to their loved ones while they’re still alive. This allows them to see their loved ones enjoy their gifts, and it could even bring families closer together.

Another advantage of gifting has to do with the annual gift tax exclusion. This federal tax exemption allows people to engage in “strategic gifting,” and this strategy can reduce taxable estates by a considerable margin.

In 2025, this annual exclusion will rise from $18,000 to $19,000. In other words, you can gift up to $19,000 to a loved one each year and remove that amount from your final taxable estate, without the need to file a gift tax return. Keep in mind that you can give multiple gifts each year. Assuming you have four adult children and eight grandchildren, this represents annual gifts totaling up to $152,000 without disclosing the gifts to the IRS. If you continue this pattern during the last few years of your life, it could be possible to reduce your taxable estate. Keep in mind that this would only be beneficial if you would owe estate taxes upon your death, and this is only an issue for high-net-worth individuals.

Handling of Family Heirlooms and Other Personal Items of Value 

Oftentimes, an elderly family member falls ill and needs care prior to passing away. During that time, many people, including family members and caregivers, enter the person’s home and, unfortunately, personal jewelry and other meaningful items can disappear. This leads to ill will and heartbreak. When an item is going to be gifted at death to a family member, it is sometimes better to make that gift prior to a medical crisis in order to ensure that the intended beneficiary actually receives the item earmarked for them. Getting to hear “thank you” is yet another benefit of making the gift while the property is safely in the control of the giver, before any turmoil happens.

The Advantages of Inheritance 

In contrast, inheriting property has its own advantages. This could be especially advantageous when leaving behind assets that have appreciated in value throughout the years. Examples include real estate, stocks, collectibles, and so on.

When your loved one inherits these assets, they are “stepped up” or re-valued to the fair market value according to IRS rules as of the date of your death. In other words, the IRS treats the property as if the beneficiary had just purchased it themselves at the value it has on the date of your death. As a result, there are no capital gains taxes to worry about if your beneficiary then sells the asset at its date of death value.

This is why it might be a good idea to leave behind assets that have appreciated in value rather than gifting them. The real estate market has ballooned significantly over the decades, and beneficiaries could be crushed by capital gains taxes when inheriting properties. That being said, gifting cash is still a viable strategy that can reduce inheritance taxes for high-net-worth estates.

Can a North Palm Beach Estate Planning Lawyer Help With Gifting?

 A North Palm Beach estate planning lawyer may be able to help with gifting even before you pass away. You can also discuss the pros and cons of gift-giving with your estate planning lawyer during a consultation. Kitroser Lewis & Mighdoll understands that each family has unique priorities – and we can help you make the most appropriate choice based on your specific needs. Schedule a consultation today to get started.

Sources: 

investopedia.com/terms/s/stepupinbasis.asp#:~:text=The%20step%2Dup%20in%20basis%20is%20a%20valuable%20tax%20provision,when%20they%20sell%20the%20asset.

irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025#:~:text=Estates%20of%20decedents%20who%20die,%2418%2C000%20for%20calendar%20year%202024.