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Should you gift assets now or pass them through an estate later?

On Behalf of | Jan 27, 2025 | Estate Planning |

When planning your estate, deciding whether to gift assets now or pass them on later can be a difficult choice. This decision affects your financial goals, your family’s future, and your tax obligations. Nevada’s state laws and federal tax rules play a key role in determining what option works best for you.

What are the benefits of gifting now?

Gifting assets during your lifetime can reduce the overall size of your estate, potentially lowering estate taxes. Nevada residents benefit from no state inheritance or gift tax, which makes lifetime gifting an attractive option. You can also see your loved ones enjoy the benefits of your generosity, whether it’s helping with a home purchase or funding education.

Federal gift tax exemptions allow individuals to gift up to $17,000 per person annually without triggering taxes. Larger gifts may count toward your lifetime exemption, currently set at $12.92 million. Gifting can also be a good strategy if you expect the value of your assets to grow significantly over time.

Why might you wait to pass assets through your estate?

Some people choose to transfer assets through their estate instead of gifting during their lifetime. Nevada’s favorable probate laws and the absence of an estate tax at the state level can make this option simpler. Assets passed through an estate also benefit from a step-up in basis, which can reduce the capital gains tax owed by your heirs if they sell the assets later.

Waiting to transfer assets also allows you to retain control of your wealth and ensure it’s used according to your wishes. This can be important for high-value or complex assets like businesses or real estate.

Balancing these options often depends on your family dynamics and the specific assets involved. Understanding how tax laws apply to your situation can help you make informed decisions about your estate planning strategy.