| Advantages | Disadvantages |
| Freezes the Value of an Asset; Reduces Estate Taxes – Gifting an asset that is rapidly appreciating (e.g. shares, crypto currency , real estate) “freezes” the value in your estate locking out the appreciation and saving estate taxes. Any gift will decrease your the taxable estate, potentially lowering estate taxes. | Gift Taxes May Apply – Large gifts may trigger gift tax liabilities and almost always requires the filing of an IRS form 709. |
| Immediate Benefit to Recipient – Beneficiaries can use the gift while the donor is still alive and the donor can see it’s value. | Loss of Control – Once given, the donor has no say over how the asset is used. |
| Avoids Probate – Assets transferred during life are not subject to probate, simplifying estate distribution. | Medicaid Eligibility or SSI Qualification Impact – Gifting assets may affect Medicaid eligibility due to look-back periods. |
| Potential Tax Benefits – Some gifts (e.g., educational or medical expenses paid directly) are tax-exempt. | Capital Gains Tax for Recipient – The recipient may face higher capital gains taxes due to loss of stepped-up basis. |
| Reduces Family Conflicts – Clearly distributing assets in life can minimize disputes after death. | Personal Financial Risk – Giving away too much may impact the donor’s financial security later in life. |
| Encourages Financial Responsibility – Helps beneficiaries develop financial independence under donor’s guidance. | Possible Resentment Among Heirs – Unequal gifting may create family tensions. |
Would you like a more detailed breakdown for specific situations (e.g., real estate, crypto, cash gifts, or stocks)?
For assistance call your attorney at Thrash, Carroll & Sanchez Law Group at 512-263-5400 or email for an appointment for a complimentary initial consultation to discuss these powers of attorney at [email protected]