Parents in their 60s and 70s can give the greatest gift to their kids-an orientation toward financial awareness. Look at these mistakes that kids make which cause them to pay taxes unnecessarily.
I met a woman who was named executor in her parents will. She took the $40,000 executor fee, which she had to report as income and pay tax. She could have refused the fee and inherited the same $40,000-tax free.
If your heirs inherit an asset that was taxed in your estate (e.g., an IRA or annuity), when funds are later withdrawn the heirs must pay income tax on the accumulated earnings. However, they can take a credit for estate taxes -- yet most heirs are unaware and simply pay more than necessary.
Starting next year, when heirs inherit a house that was used as a principal residence of the decedent for 2 of the 5 years prior to death, they can exclude $250,000 of the gain.
These are but a few of the new items accruing to an heir's benefit. But if you are not aware enough to ask your accountant or tax attorney about these opportunities, they can go unused and IRS is all too happy to collect taxes.
Therefore, the greatest gift you can give heirs is a basic awareness and interest in tax and financial matters, so that they ask financial-savvy questions.