Want to Give the Kids an Early Inheritance? 4 Things to Consider

dan • Mar 05, 2022

If you’re thinking about giving your children their inheritance early, you’re not alone. A recent Merrill Lynch study suggests that these days, nearly two-thirds of people over the age of 50 would rather pass their assets to the children early than make them wait until the will is read. It can be especially satisfying to fund our children’s dreams while we’re alive to watch them enjoy it, and there’s no real financial penalty for doing so, provided that you structure the arrangement correctly. Here are four important factors to take into account when planning to give an early inheritance.


Keep the tax codes in mind

The IRS doesn’t really care whether you give away your money now or later — the lifetime estate tax exemption as of 2016 is $5.45 million per individual, regardless of when the funds are transferred. So, whether you give up to $5.45 million away now or wait until you die with that amount, your estate will not owe any federal estate tax (although, remember, the law is always subject to change). You can even give up to $14,000 per person (child, grandchild, or anyone else) per year without any gift tax issues at all. You might hear these $14,000 gifts referred to as “annual exclusion” gifts. There are also ways to make tax-free gifts for educational expenses or medical care, but special rules apply to these gifts. Your estate planner can help you successfully navigate the maze of tax issues to ensure you and your children receive the greatest benefit from your giving.

Gifts that keep on giving

One way to make your children’s inheritance go even farther is to give it as an appreciable asset. For example, helping one of your children buy a home could increase the value of your gift considerably as the home appreciates in value. Likewise, if you have stock in a company that is likely to prosper, gifting some of the stock to your children could result in greater wealth for them in the future. Note, however, that there can be capital gains tax benefits to making certain transfers at death.

One S ize does not fit all

Don’t feel pressured to follow the exact same path for all your children in the name of equal treatment. One of your children might actually prefer to wait to receive her inheritance, for example, while another might need the money now to start a business. Give yourself the latitude to do what is best for each child individually; just be willing to communicate your reasoning to the family to reduce the possibility of misunderstanding or resentment.

Don't touch your own retirement

If the immediate need is great for one or more of your children, resist the urge to tap into your retirement accounts to help them out. Make sure your own future is secure before investing in theirs. It may sound selfish in the short term, but it’s better than possibly having to lean on your kids for financial help later when your retirement is depleted.


Giving your kids an early inheritance is not only feasible, but it also can be highly fulfilling and rewarding for all involved. That said, it’s best to involve a trusted financial advisor and an experienced estate planning attorney to help you navigate tax issues and come up with the best strategy for transferring your assets. Give us a call today to discuss your options.

What next?

If you think it might be time to think through your estate plan, you can:
  1. Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
  2. Visit our estate planning page to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
  3. Get a copy of our estate planning checklist to see where you currently stand.
  4. Learn more by reading our blog or watching our videos .

The Probate Process in Colorado

30 Apr, 2024
The Probate Process in Colorado

When and How Often Should You Update Your Estate Plan?

By Dan McKenzie • 04 Apr, 2024
The most common questions we get about estate planning are when to start it and how often to update it. Learn more about how we advise our clients on these questions here.

The Importance of Estate Planning: Avoiding Probate and Protecting Your Assets

By Dan McKenzie • 29 Mar, 2024
Proper estate planning is not just about saying who gets what when you die. Done correctly, it can help you avoid court and maintain privacy.

Understanding Probate in Colorado: The Guide to Timelines, Steps, and What to Expect

By Dan McKenzie • 28 Feb, 2024
If you have recently lost a loved one, you might find yourself participating in a probate process, either as the executor or a beneficiary. Learn more about what to expect from that process here.

Sharing Your Estate Plan: A Delicate Balance

By Dan McKenzie • 04 Feb, 2024
One of the most common questions we receive is whether or not to share the details of an estate plan with adult children. This decision is personal and can have far-reaching implications for the individual and their family. The Benefits of Sharing Your Estate Plan Sharing your estate plan with your adult children can be beneficial. Doing so allows the family to discuss the plan's details, including what needs to be done in the event of incapacity or death. This open communication can help set expectations and facilitate a smooth estate administration process. A discrepancy between the plan and what the family expected is one of the most significant sources of tension and difficulty during the estate administration. It can be helpful to identify and resolve the discrepancy while the person who can change the plan can either still do so or explain why they designed the plan the way they did. Our firm generally recommends communication with fiduciaries and beneficiaries about the plan. However, communication does not necessarily mean sharing the complete draft of the estate plan. The Risks of Sharing Your Estate Plan While there are benefits to sharing your estate plan, there are also potential drawbacks. One of the main concerns is that sharing the estate plan can create difficulties if the plan is changed after it has been shared. This can be particularly problematic if any of the beneficiaries of a previous plan will receive less from the new plan. Another risk is the possibility of inconsistent plan drafts circulating after death. This can lead to confusion and potential disputes among beneficiaries. Suggestions for Communicating Your Estate Plan Given these considerations, here are some suggestions on how to best communicate the details of your estate plan: Maintain a Record : Record what has been shared, who it has been shared with, and when it was shared. This can help ensure everyone is on the same page and minimize potential misunderstandings. Share Digital Copies : Consider sharing digital copies of your estate plan, accompanied by a cover letter or mark reminding everyone that the plan can change. This can help mitigate the risk of outdated drafts circulating. Provide a Summary : Instead of sharing the entire plan, consider providing a summary. This can give your family a general idea of your intentions without divulging all the specifics. Again, include a disclaimer that the plan can change. Remember, every situation is unique, and what works for one family may not work for another. It’s essential to weigh the benefits and risks before sharing your estate plan. As always, we’re here to help guide you through this process. Please note that this blog post is intended for informational purposes only and does not constitute legal advice. Always consult a qualified estate planning attorney for advice on your situation.

Contesting a Will in Colorado: A Simple Guide

By Dan McKenzie • 29 Dec, 2023
If you are unhappy with the terms of a will, you may have the right to challenge it in court. However, contesting a will is not easy and requires certain legal grounds and procedures. This blog post explains the basics of how to contest a will in Colorado, including who can do it, what reasons are valid, and what steps are involved.

What to Do If You Think Your Trustee Is Not Doing Their Job Right

By Dan McKenzie • 26 Dec, 2023
Explore the essential steps to take when a trustee is not fulfilling their duties effectively. This guide provides practical advice on identifying trustee shortcomings and the legal actions available to address them. Ensure your trust is managed properly with our expert insights on trustee responsibilities.

What is the Formal Probate Process in Colorado and When Do You Need It?

By Dan McKenzie • 24 Dec, 2023
The blog post outlines the formal probate process in Colorado, detailing when it's necessary and the steps involved. It serves as a guide for individuals navigating the legalities of estate management after a loved one's passing. The content is informative and designed to assist users in understanding the complexities of probate law in Colorado.

How to Start an Informal Probate Process in Colorado

By Dan McKenzie • 24 Dec, 2023
Discover the straightforward steps to initiate an informal probate process in Colorado with our concise guide. Learn what information is required for the application, including personal details of the decedent and your connection to the estate. Understand the importance of meeting the time limits for filing and find out how to navigate the process without a court hearing, all explained in simple terms. Ensure a smooth probate journey with our expert insights on Section 15-12-301 of the Colorado Probate Code.

What To Do With the Will of Someone Who Has Passed Away in Colorado

By Dan McKenzie • 21 Dec, 2023
What happens to the Will of someone who has passed away in Colorado? Learn about the custodian’s duty to deliver a will promptly and to the correct probate court, ensuring your loved one’s wishes are honored. Discover the importance of acting swiftly and accurately in the probate process to preserve legacies and avoid legal repercussions.
More Posts
Share by: