Many of our clients are parents or grandparents hoping to set up their heirs for financial success in the long term. One strategy that these clients use is the lifetime gift, which allows individuals to give money while still alive instead of through their estate plans. What are the implications, though, of this lifetime gift for a person’s estate planning documents? In today’s blog, we cover the overlap between these two types of gifts.
What is the Lifetime Gift Limit?
The government permits individuals to give financial gifts of a certain amount to beneficiaries of their choosing without facing tax consequences – this means the individuals can give money away while they are still alive without having to pay the federal gift tax. In 2024, the annual federal gift tax exclusion amount is $18,000 per person and $36,000 for married couple. This kind of gift allows individuals to give money away in increments over the course of their lives, perhaps to their children or their grandchildren.
Does the Lifetime Gift Prohibit Beneficiaries from Inheriting in a Will?
If a son, daughter, or grandchild inherits over the course of the parent or grandparent’s lifetime, he or she can still inherit at the parent or grandparent’s death. Importantly, however, if the estate documents are clear that the lifetime gift was intended to replace the will, trust, or estate document’s provision for a gift, the probate court will likely rule that the beneficiary cannot receive both gifts.
It is therefore important to make estate planning documents clear – is the gift at death meant to replace or supplement the lifetime gift? Without detailed instructions, courts will be left to interpret the testator’s wishes in a way that might not align with their intentions. Speaking with an experienced, knowledgeable estate planning attorney is the first step to making sure that lifetime gifts and provisions of an estate plan do not interfere with each other. By taking the time and energy now to make sure you are on the right track, you can save your loved ones the headache of having to navigate possible discrepancies in probate court long after you are gone.
Do You Have Questions for a Texas Attorney About Your Estate Plans?
If you would like to work on meeting your estate planning goals with a trusted group of attorneys, give our office a call at McCulloch & Miller, PLLC. Our Texas team is founded on the principle that the client’s interest, goals, and desires must be at the forefront of any estate planning strategy. We are proud to represent clients in the Houston community, and we would be proud to help you reach your financial goals through the estate planning process.
For a consultation with a member of our team, give us a call today at 713-936-9073. You can also fill out our online form to have an attorney reach out to you as soon as possible about your estate plans.