You may want to give major gifts to your loved ones during your lifetime. These gifts may include your house, stocks, bonds and/or large sums of money. There are advantages to making gifts, such as the joy of the donor and donee, a decrease in the value of the donor’s estate and a decrease in estate taxes. However, there are also unintended disadvantages of making gifts, such as:
- Your gift may be attached by creditors of the donee
- Generating federal gift taxes
- Increasing capital gains taxes for the donee
- Disqualifying the donor from Medi-Cal benefits
- An unintended in-law may inherit your property
Therefore, always obtain legal advice before giving away your assets or making any major gifts.