There are various ways to transfer property before death and several advantages to doing so. Transferring property can be a way to avoid probate and its associated costs, as well as to reduce your federal income and estate taxes. You can make outright gifts of up to $10,000 (ten thousand dollars) per year, per person making the donation, and be free of the federal gift tax. This means that one couple can give up to $20,000 (20 thousand dollars) per year in gifts and not be subject to the tax. There's also no tax levied on gifts of tuition for education, or for paying someone's medical expenses. You can also give property to someone and retain a life estate, essentially allowing you the use of the property until you die, without retaining the ownership. You may also want to consider purchasing life insurance and then transferring the policy ownership to your child. Another idea is to sell your property to your children. You can also loan money to your children and then forgive the debt, but the loan must be in writing. Other possibilities are gifts in the form of trusts, the transfer of company stock to your children, and even employing your children in the family business. Gifts to charity are another way of transferring your property and gaining income tax, gift tax, and estate tax deductions. Charitable annuities allow you to give property to a favorite charity in return for a life-long annuity. Other similar ideas are charitable remainder trusts and pooled income funds, which give income back to you for making charitable contributions. Consult your tax attorney, tax specialist, or a financial and estate planning advisor for information on more ways to transfer your assets.
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