Drawbacks of Outright Gifts

Even when their wealth is beyond what they reasonably need to live comfortably, parents are concerned about the wisdom of making outright gifts to their children. Sometimes there is an issue concerning the child’s marital status and what will happen to the gifted property in the event the child is divorced. Sometimes there are concerns about the child’s level of financial responsibility and whether the funds will be squandered. Many times the parents are concerned about the creditors of a child reaching the property. When the situation involves minor children or grandchildren, who are not legally capable of holding title to property, there are questions about who will act on the child’s behalf in holding the property and when the property should be distributed to the child. These are all matters of great consequence and must be carefully considered by parents contemplating this type of gift giving program.

Most of the problems of an outright gift to a child can be eliminated through the use of a trust designed for this purpose. Trusts are extremely flexible in form and almost any asset protection and estate planning goal can be accomplished by an attorney who is knowledgeable and experienced in this field.