When deciding how to set up an estate plan, some individuals decide that they actually want to give their assets away before death. They give money to the kids, give them a house or a cabin, hand their cars to the next generation of drivers, and much more.
The motivation for this is usually twofold. For one thing, it can be rewarding. You get to see your heir use and enjoy the inheritance, something you don’t get if they just receive it upon your passing. Additionally, you may feel that giving the money away in advance makes the process easier, especially since you can talk to your heirs about your goals.
The downside: The future is unclear
There are a few downsides here, such as the fact that even giving money away in advance doesn’t prevent disputes between your heirs after you pass away, but one of the biggest issues is just that the future is unclear and unpredictable. You’re gambling by giving money away in advance.
For instance, perhaps you give an heir $250,000 because you have enough to pay the bills. Your home is paid off. You have little debt. You just want to live a comfortable life.
Then you get sick. Your hospital bills are enormous, and then you end up spending months in a nursing home. You can’t predict something like that, and you could now have trouble covering your own costs and providing for your own needs. You may think it won’t happen to you, but more than one million Americans live in nursing homes, so you must consider it.
As you try to determine the best way to make your estate plan, carefully think through all of your legal options for your estate. There may be several different ways to accomplish your goals.