Some people think that they can avoid estate planning by giving away their property while they are still alive. Although it seems like you’re taking control, this actually results in a loss of control. Most always, when a parent gives away his property to his children, there’s a tacit belief that the parent can have the property back, if he or she really needs it. Many times it doesn’t work that way.
There are lots of variations about ways the property can be lost forever.Perhaps the child spends the gift and can’t return it. Perhaps the child no longer has the same view of things as the parent, and refuses to return it. Perhaps the child’s creditor or “ex” has seized the property.
Giving away your assets can also result in tax issues. If you make gifts in excess of $13,000 per person in a year during 2009 and 2010, then you must file a gift tax return. If you give away too much property, you may be liable for gift taxes. If your beneficiary sells your property after your death, there may be significantly more taxes due at the time of the sale, solely because you gave the property away before your death.