Earlier this year, the annual exclusion cap for federal gift taxes was raised to $16,000 per individual annually. The way beneficiaries receive gifts in your exact estate plan will dramatically impact how that affects you and them both. This is especially true when you give a direct gift to a minor. Creditors attempting to collect money may swoop in when a beneficiary receives a direct gift. Minors might not have the resources or capacity to repel or assuage these creditors, especially if your estate plan was insufficient and gave assets to beneficiaries who did not expect them. More than anything, minors receiving direct gifts will require structure so that they do not squander the assets or lose them in business dealings they do not fully comprehend. If you are considering bestowing direct gifts to minors in your trust, please read on, then contact an experienced Putnam County trusts attorney to learn what you should know about direct gifts to minors in New York estate planning.
How do you protect minors receiving direct gifts in your New York estate plan?
Under New York State law, you have a few options at your disposal, most stemming from the establishment of custodial accounts and/or trusts. Some of your options are as follows:
- Custodial account: This method can be adapted to fit your needs, but it provides structure to when and how the minor receives the assets until he or she reaches the age of 18 or turns 21, upon which time the assets are directly passed on to the recipient, including all investment and management choices.
- Irrevocable trusts: This method lets assets be utilized for a wide range of needs, including medical costs or the purchase of real estate, but a trustee can manage the assets even after the recipient reaches the age of majority.
- Minor trusts: This method applies assets for minor beneficiaries with limited exceptions and, once the beneficiary turns 21, affords him or her the opportunity to withdraw assets from the trusts. Any assets not withdrawn can be kept in the trust, which can then be converted to another type of irrevocable trust that permits continued annual exclusion gifts to be made to a beneficiary.
Before you consider whether or not to give a minor a direct gift, you should reach out to a skilled Putnam County estate planning attorney to discuss how to protect your beneficiaries.
How can a New York estate planning attorney help you give direct gifts to minors?
A qualified legal representative from our firm will help you determine what arrangement works best for you. After you make that decision, he or she will then help draft the trust in the strongest possible language to ensure that your wishes are carried out and that your beneficiaries receive the legal protection they deserve. These matters are complex and time-consuming, so let our firm handle them. Please give us a call today.
Contact our Firm
If you or a loved one needs assistance creating an estate plan and wish to speak with an experienced attorney, contact the Law Office of Andres D. Gil, PLLC today.