What are the tax implications of an early gift of assets to my heirs?
March 8, 2023 | 50,00 EUR | answered by Mia Widmann
Dear estate lawyer,
My name is Benjamin Hartmann and I am facing the question of what tax implications an early gift of my assets to my heirs could have. The background is that I am in a good financial situation and would like to pass on a portion of my wealth to my children during my lifetime.
Currently, my assets consist mostly of real estate, securities, and cash. I would like to do something good for my children and support them financially while I am still alive. However, I am concerned that an early gift could result in tax disadvantages and I may end up paying more taxes than necessary.
My concerns mainly stem from not knowing exactly how an early gift is treated for tax purposes and what impact this could have on my finances and those of my heirs. I want to ensure that my children have to pay as little tax as possible and that the wealth is protected as best as possible.
Therefore, my specific question to you is: What are the tax implications of an early gift of my assets to my heirs and how can I minimize potential tax risks? Are there any specific tax exemptions or tax planning options that I should consider?
Thank you in advance for your help and support.
Sincerely,
Benjamin Hartmann
Dear Mr. Hartmann,
Thank you for your detailed question regarding premature gifts and the associated tax implications. It is understandable that as a wealth holder, you want to ensure that your children pay as little tax as possible and that your assets are protected to the best of your ability. In my following detailed response, I would like to provide you with a comprehensive assessment of this complex topic.
In general, gifts made during one's lifetime are subject to gift tax. This tax is levied when you gift assets to your heirs without receiving anything in return. Gift tax is calculated based on the value of the gifted assets, taking into account exemptions. In your case, where mainly real estate, securities, and cash are to be gifted, it is important to know that each heir has an individual exemption. The exemption amount varies depending on the relationship between the donor and the recipient. For example, the exemption for children is €400,000 every 10 years.
To minimize potential tax risks, there are various planning options that you can consider. One option is to distribute the assets through multiple gifts to maximize the exemptions. Lifetime gifts in the form of real estate or securities can also be tax advantageous, as the value of these assets may appreciate over time.
Furthermore, you may also consider making tax-optimized gifts over a longer period to spread out and reduce the tax burden. In this case, it is advisable to seek advice from an experienced tax advisor or specialized estate lawyer to find the optimal solution for your individual situation.
In summary, premature gifts to your heirs can have tax implications, but there are various ways to minimize these tax risks and protect your assets to the best of your ability. It is important to address this issue early on and seek professional advice.
I hope that my response has been helpful to you, and I am available for any further questions you may have. Thank you for your trust, and I wish you all the best for your future plans.
Sincerely,
Mia Widmann
