How To Give Property to Children Before Death

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Full Bio →

Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 15, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

You don’t have to wait until you pass away to give your wealth to your family. In fact, in the case of large estates, it is frequently in your best interests to be generous with your children before you die. Otherwise, a large portion of your money will go to the IRS instead of your children.

Gift Tax Exemption and Outright Gifts

Under current IRS law, you can lawfully give away $14,000 annually without any tax consequences to your children. If your spouse is still alive, you can give a combined gift of $28,000. As you can imagine, this provides for a loophole large enough for some very creative ways to give property to your children.

The funds can be any cash assets, value in real property, or stocks and bonds. Any $28,000 from your portfolio can be transferred.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption

Sale and Debt Forgiveness

One of the more creative methods to dispose of real property is by “selling” the property to your children using a legal note. The note is drafted as though you are the mortgagor and the deed is changed into your children’s names. Then, every year on January 1 (or any other appropriate calender year date), the debt is forgiven by $28,000 and the note is reduced. This continues until the property is completely transferred into your children’s ownership.

Additional Giving Exceptions

If you still need to remove more funds from your estate, the IRS provides further gift tax exceptions for educational and medical expenses. According to IRS law, any direct payment for medical or educational expenses can be unlimited gifting amounts. If your daughter is attending an expensive college and you would like to pay for it, you can cover all expenses that go directly to the college – gift tax free. This rule also applies to graduate education such as medical school or law school. Also, if a child is ill and has a large amount of medical expenses, you can step in and pay the hospital and doctor’s bills for your child. Remember that the money must be paid directly to the medical institution in order to be gift tax free.

Consult an Attorney

Annual gift tax exclusion is a complex area of the IRS code. In order to avoid creating excessive tax bills for your children, giving should be done under the guidance of an attorney to ensure that the benefits for you and your children are maximized.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption