Gifting an Early Inheritance: Benefits & Questions

When we think about leaving a legacy, the thought of passing on wealth after we pass away comes to mind. Now, this is an entirely acceptable way to help your loved ones; after all, you won’t be around anymore to lend them a hand when they need financial help. But have you ever considered the option of passing on a legacy while still alive? Gifting an early inheritance is a great way to see your family benefit from your help and give yourself peace of mind at the same time. 

Gifting an early inheritance? Or waiting?

You have two options; you can choose to provide your family with an early inheritance or plan for it with your final expenses. Either way works. One just allows you to enjoy seeing it in action, while the other, well, doesn’t. According to a study conducted by Merrill, A Bank of America Company, upwards of 65% of Americans said that gifting an early inheritance would be ideal, if not the total amount at the very least, a part of their estate.

The benefits of gifting an early inheritance

There are many great benefits when it comes to gifting an early inheritance. Some of the most common are:

• You see your gift in action. Like we mentioned above, if you provide an early inheritance, you can see it being used while you’re still around – allowing you to enjoy it all the more. 

• You are helping with education costs. Of course, leaving a legacy after you pass away is still helpful for your family, but what if you have someone you love who needs financial help with their education? Gifting an early inheritance can help cover these costs and not be considered a “taxable gift.” 

• The IRS won’t care if it is gifted now or later. People may be hesitant when it comes to gifting an early inheritance because of the IRS. But the reality is, the IRS is ok with either as long as it falls within a certain amount. For 2020-2021, you are free to gift up to $15,000 to a person and not have to deal with the IRS. If you’re married, you can freely gift up to double that amount, as it would be $15,000 from you and another $15,000 from your spouse.

Some questions to consider

Before you decide to start gifting early inheritances to your loved ones, you must ask yourself some essential questions.

• Am I gifting too much? We stress how important it is to ensure you are gifting a comfortable amount of inheritance while alive. Remember, you still need to be financially secure if leaving an early inheritance is your goal. Otherwise, you could end up being financially dependent on your children.

• Does every family need an inheritance now? You may be in a situation where you have a child that needs some financial support, maybe with their business or schooling, or you may have loved ones who are financially secure at the moment. It is crucial to talk with your family and explain your reasons for leaving an inheritance early or later. You don't want any resentment or anger when providing inheritances, and having open talks about this will help everyone better understand your plans. 

Unsure what to do?

The decision of gifting an early inheritance can be difficult and should be done after much reflection and planning. But if you cannot provide an early legacy, you can still always provide one after you pass away. As we mentioned earlier, a later inheritance is still beneficial to and appreciated by your loved ones. Our final expense plan provides Americans with a simple solution to leaving a legacy behind after they pass away. With up to $25,000 in benefits available and no medical exams required to apply, we’re making it easy to ensure your loved ones have the inheritance they deserve. If you would like more information or to see your plan options, please feel free to complete our short free quote form, which will get you in contact with one of our local licensed advisors.