Do I Need to Be Thinking About This Already?

A number of business owners and individuals make annual gifts to their children and grandchildren. This is done for a number of reasons, but avoiding estate taxes and transitioning the family business are two very common motivations. Should you be thinking about annual gifts this early in the year?

Even though there are four months left in the year, it’s best to start soon. When September begins, the pace of things always accelerates. Also, very few clients in my experience have more time at the end of the year (between Thanksgiving and Christmas). So, initiating this process now can make it much less stressful.

Making gifts can likewise take some time to complete. Most annual gifts are part of a plan that involves having an appraisal done. If the gifted asset is hard to value (like a business), valuations cannot be done in a short time. This is even more the case if an appraiser hasn’t valued the asset or company before.

It’s also very common for business owners to be thinking about gifting to transition their business, but they haven’t actually started the process yet. If a gifting plan needs to be developed, it’s even more important to start now. Plus, if gifting is done this year yet, the cost of an appraisal can be used to support gifts for two tax years. This will maximize the use of the valuation and lessen the overall cost of the planning. Finally, starting early allows for more thoughtful planning and time to communicate the plan to your children so that they can better understand and appreciate the process.

Don’t wait until you see your calendar in the fall. Start the gifting process soon. If I can be of any help in this planning process, feel free to let me know.

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