Here are three common purposes and situations where Gift Deeds are used:
1. Gifting to loved ones
Families commonly use Gift Deeds to transfer real estate or assets. For example, parents or grandparents may use a Gift Deed to gift a family cabin to their children or grandchildren. Or, a mother may give her daughter specific valuables, such as jewelry, and document it with a Gift Deed.
2. Donating to charity
Some individuals use Gift Deeds to donate property or assets to charitable organizations or nonprofits. This can have tax benefits for the donor, such as deductions for charitable contributions.
3. Estate planning
Gift Deeds can be part of an individual's estate planning strategy. By gifting assets during their lifetime, individuals can reduce the size of their taxable estate, potentially lowering estate taxes.
Gifting assets during one's lifetime can help reduce potential inheritance disputes among heirs since the donor's intentions are clear.
Unlike a Will, assets transferred through a Gift Deed avoid the probate process. This means the gifts pass directly to the recipient without court involvement, speeding up the transfer process.