Gifting property in an estate plan by parents in Florida or elsewhere is always done with the best of intentions. There is nothing wrong with a parent wanting to give his or her child property out-right if that is a possibility. However, certain precautions need to be taken in order to help beneficiaries avoid the significant taxes that may follow receiving such a gift.
There are a number of reasons as to why a parent may want to gift his or her home or other property to his or her child or children. Regardless of the why, parents need to consider the income tax that their children may be stuck paying by receiving the property as a gift. The tax burden is often created when property is gifted while one is still alive rather than allowing children to inherit it after one's death.
To help beneficiaries avoid paying income tax on property, parents may set up a revocable trust so that their homes or other real estate properties may be passed on only after death. This way, if children choose to sell the property and do so at the value of the property at the time of their parent's death, they will not be held responsible for any income taxes. If a property is gifted while one is still alive, the receiving child will be held accountable for paying taxes on a sale, which can be pretty significant depending on the value of the property.
Estate and end-of-life planning can be a difficult process. There are many laws that can change what beneficiaries actually receive versus what is intended for them. When working on estate plans, Florida residents may turn to experienced estate planning attorneys in order to ensure that what they want can be achieved without creating a financial burden for their beneficiaries.
Source: fox61.com, "Tips to avoid an income tax and estate planning time bomb", Jan. 5, 2016