Livens & Reed, PLLC

Investments are the best inheritance gifts for heirs

Passing down learned financial expertise to children and grandchildren is a great way for families to invest in their future. Recent changes to tax laws have altered the dynamics regarding multigenerational investment planning. In Texas and other states, it makes sense for older generations to maintain control over assets to avoid burdening family members with taxes and capital gains on inheritance.

Previous laws enabled wealthy families to move assets down to future generations early in life. One reason was the immediate tax savings from transferring taxable income from parents with high incomes versus children with little or no income. The rules have changed in recent years, allowing wealthy families to escape estate tax altogether. Elders can pass down assets to their future generations in ways that can avoid capital gains.

Experts recommend that elders hold assets and invest on behalf of heirs. By maintaining control and designating gifts to be passed down after one's death, the heir will pay no capital gains tax at the time of sale. If the same gift is bestowed upon them now, there is no estate tax, but if the investment grows over the next 20 years, there could be long-term capital gain penalties imposed.

Implementing wise investing strategies will allow peace of mind knowing there will be enough money to sustain one's lifestyle and ensure that loved ones will be spared tax burdens associated with inheritance. In Texas, investors may benefit from the expertise of an attorney well versed in estate planning. A lawyer can answer any questions they may have about their estate and inheritance gifts.

Source:, "Why Investing for Your Heirs Is the Best Gift You Can Give -- The Motley Fool", Dan Caplinger, Jan. 5, 2018

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