Given that Brian Bischoff, principal/financial advisor of Bischoff Wealth Management in Greenwood, has five children, he knows firsthand facts about planning for gifting personal assets.
Brian says he and his wife, Holly, started planning their inheritance approach as their oldest children were nearing college age, underscoring the concept that it's never too early to start working toward a goal. Brian obtained his certified financial planner designation in 2007 and started his own firm.
"Planned giving is one of the fundamental aspects that I discuss with every client as one part of their goals and objectives. Giving's intertwined with savings and retirement, so we monitor it all regularly, and for sure on an annual basis to check for any potential changes," Brian states.
Proper timing of giving gifts from a personal estate while one is still alive can be done for valid tax reasons, however timing or value amounts also can create financial problems, especially with capital gains taxes. Establishing a trust and gifting assets to loved ones can be effective ways to transfer assets, but there are rules and limitations, reminds Brian.
"Whether an inheritance is left for relatives, or designated for charitable purposes, can impact how you save and take retirement plan distributions. Before deciding to leave an inheritance, consider your income needs, potential health care costs or long-term medical and residential needs," suggests Brian. "Retirees risk running out of money if they live long lives, so preparation is key."
Alternatively, he says some people prefer to leverage the current federal $18,000 gift tax limit, also known as the gift tax exclusion. This amount is the maximum one can give a single person without having to report it to the IRS. For married couples, the limit is $18,000 each, for a total of $36,000.
"Within our process, we also can work with attorneys and other professionals for more elaborate plans," Brian assures.
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"To leave an inheritance requires planning; it's important to consult a tax advisor to determine what makes the most sense."