“Attention Passengers”

Be Smart about Gifting

On a recent airline flight, the attendant started the usual litany of warnings, guidelines, and blah, blah, blah; we’ve heard the same thing repeated a hundred times.  But this time, something she said stood out for me: “In the event oxygen masks are required, place the mask over your own face before attending to your child”.  It makes perfect sense.  Although your first instinct is to do anything to protect your child, you won’t be much use to them if you black out or expire.

I’ve seen this instinct play out more than a time or two with my clients.  Some of the least wealthy are the most generous with their money.  They have few desires for their own comfort, but there’s a child who needs tuition, a grandchild wanting a car, a sister who is having trouble getting a mortgage.  Or they recently received a small inheritance and want to share it with everyone.  They’re sweet, caring people and I love them.  But they’re not listening to the flight attendant.

We’ve been through the numbers and the scenarios together.  We talk about how they could outlive their money if they don’t stick to the plan we’ve put in place.  They live frugally and watch their pennies.  Then those big hearts of theirs step in and ignore it all.  Their nest egg may seem like a big number to them, but it needs to last a long time.  It needs to be there when the inevitable happens—a medical event (or several), a source of income dries up, or they can no longer live safely by themselves.  It needs to be there when the oxygen isn’t.

Seriously consider your own situation the next time you feel that urge to bless someone with your gift.   As a “helping” professional, I fully understand both the instinct and the need.  Helping others is important to a strong society.  But first be sure you have enough to cover your own future needs so you don’t then become a burden later when the oxygen runs out and you have no mask.

Gifting is part of a comprehensive estate plan, and a competent planner can help you determine not only the appropriate amount but also the timing and method that will yield the best outcome for you and the recipient of your generosity.

Watch this video to learn about some of the tax implications of gifting and estate planning.