How to gift to children responsibly

Parents in Ohio and throughout the nation may want to gift assets to their children. However, it is generally a good idea to be strategic about how and when such gifts are made. For instance, it may be better for a parent to wait until he or she passes away to gift shares of stock or other appreciated assets to a child. This is because the child gets a step-up in basis.

In other words, the child's cost basis would be the value of the asset now as opposed to when it was purchased. If the asset is gifted while the parent is still alive, the child would have the same cost basis as the parent. Another issue to consider when gifting children is that minors cannot own property on their own. Therefore, it may be best to put assets into a trust that benefits the child.

The language of the trust should be crafted to protected the child from creditors or others who may have their own interests at heart. Parents of adult children who are married should insist that any gifts made to that child be put in a separate account. This protects the gift from being commingled or otherwise becoming marital property. It may also be a good idea to insist that a married adult child signs a prenuptial agreement.

Proper estate planning may allow parents to gift children or others while minimizing estate or capital gains taxes. A properly constructed will or trust may also allow minor children to receive assets while also allowing a parent to control how they are used. Consulting with an attorney may be helpful for individuals who wish to create an estate plan or review an existing one.

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