Retirement & Financial Planning Report

If you decide you want to make lifetime gifts to your kids, what should you give away? Here’s the recommended sequence. (1) life insurance, (2) discountable gifts, such as interests in real estate or in a closely-held business may be eligible for valuation discounts, (3) cash, there will be no valuation questions or deferred tax consequences with cash gifts, and (4) appreciated securities, such as assets given away keep their basis so the recipients will owe capital gains tax if they sell. However, the tax law now limits the tax on assets held for at least 12 months to 20%, so that tax needn’t be punishing.