Post by Myra Salzer
I’ll continue my series of blogs covering the common mistakes surrounding transferring wealth with Mistake #8, Restricting Rather Than Maximizing Freedom. If you have not already done so, I invite you to read Mistake #1, Mistake #2, Mistake #3, Mistake #4, Mistake #5, Mistake #6, and Mistake #7.
Mistake #8 – Restricting Rather Than Maximizing Freedom
I have to ask – have you ever received a gift with conditions attached? Such as:
- Here is a check to help pay for your wedding, but only if you don’t invite your cousin Joey.
- Or, here are some stock certificates for a privately held company in Mexico. I’m not sure what it’s worth or how to get information, but I do know you have to report it on your tax return. Oh, and by the way, I have no idea what the basis is.
- My tax attorney is recommending that I form a partnership and gift some portion of it to you and your siblings so I can get it out of my taxable estate at a discount, whatever that means. I know you’re some sort of member, and you don’t control anything, but you do have to report it on your tax return. More information will follow, I’m sure.
These are all examples of gifts that did not maximize the beneficiary’s or the wealth holder’s freedom. While these might be worthy transfers (except perhaps the exclusion of cousin Joey at the wedding), they are not, in my opinion, gifts. It’s a transaction. It’s a business arrangement. It might have monetary value, but it doesn’t have spirit.
It is only when a gift has spirit and doesn’t limit the freedom of the transferrer or the transferee that I consider it to be a successful gift. Examples of a successful gift usually follow a successful relationship and conversation, and alignment with values and visions. You’ll know it’s successful if, after the transfer is made, both your lives are enhanced.