How to Help Parents And Avoid Taxes

10:19 am Uncategorized

senior couple e1301937493156 How to Help Parents And Avoid TaxesWhile both children and parents may be facing tough economic times these days, it can be much more difficult for an older parent since their earning days are likely behind them.  So how can you help your parents financially without incurring additional taxes?  A recent article at SmartMoney.com has some tips:

Tax-free gift. Married couples can give up to $52,000 a year tax-free to Mom and Dad since the law allows individuals to gift up to $13,000 each a year to an unlimited number of people – so you and your spouse can each give $13,000 to each parent.

Pay medical costs. By paying medical costs directly to the provider, you will not incur any gift tax.

Make home available to parents. You can help your parents pay for a new home or allow them to live in a home you already own, with some caveats: you need to be sure that if your parents plan to pay you back on a home purchase that not too much money is paid back to disqualify them from Medicaid.  If you plan to own the home, you must be clear on what is and is not going to be considered rent and name your parents the beneficiaries of the house in your will or a trust.

Trust.  You can set up a trust for your parents and have the trust purchase and maintain a home for parents.

For more tax-saving strategies, contact our California asset protection law firm.

Let our Costa Mesa law offices help you get started by contacting us today.

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