When the time comes to plan your estate, you may need to consider transferring your property and assets “in contemplation of death” (also known as “inter vivos”). This process involves the transfer of legal ownership of assets or property while you are still alive, and it is typically done for tax and estate planning purposes.
Under the law, and depending on the financial situation of the deceased, transfer in contemplation of death can potentially avoid or reduce the estate tax and other taxes that could be due upon death. This legal tool can also be used to protect assets from creditors, ensure that there are assets to provide for the spouse or children, or transfer assets that would otherwise pass directly to the executor of the will.
For example, if you have a life insurance policy with a death benefit, you would typically designate a payout to a single beneficiary in your will. Transferring the policy “in contemplation of death” to that beneficiary while you are alive, allows you to designate a secondary payout to other beneficiaries upon the death of the beneficiary that you gifted the policy to. This method of transfer can help you customize the way your estate is distributed upon your death.
To make sure that you follow all rules and regulations, you should talk to an attorney who specializes in estate planning to make sure that your assets are transferred properly and that all necessary documents are properly executed. Transfer in contemplation of death can be a complex legal process, so it is important to understand the implications and effects of your actions before making any decisions.