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Should you start to distribute inheritances early?

One thing that some senior citizens wonder, especially as they get even older, is whether they should start distributing their inheritances early. That is, suppose a woman intends to leave her extensive jewelry collection to her daughter. Should she give the collection now, or at least a few pieces, while she is still alive to see her daughter enjoy the jewelry?

The answer is not always clear-cut. There can be quite a few things to consider, so here is a look at some of them.

Is your own care covered?

It can be devastating to give a significant chunk of your assets and cash away only for you to realize some time later that you need medical care but lack the funds to pay for it. So, a good rule of thumb is for you to ensure your own short- and long-term care would be taken care of before you consider distributing assets. One way you could do this is by purchasing long-term care insurance. Of course, the earlier you start doing this and the healthier you are, the lower your payments stand to be.

Another thing to keep in mind is that if the need for care arises within five years of you giving away assets, it could hurt you further by hampering your eligibility for Medicaid and nursing home care.

Is it something you truly want?

Another question to ask is whether the wish to distribute early truly comes from you or if it has sprung from pressure, whether subtle or overt, from your heirs. For example, pressure such as, "I really need money to buy a house. Why not give me my share of the inheritance now?" can be hard to withstand repeatedly. That said, it can be fulfilling to help your heirs in a time of need rather than to wait.

If you want to start distributing now in regimented sums because you are concerned your heirs would not be able to handle a lump sum or that one of your heirs is getting married to someone you do not want ending up with an inheritance if a divorce occurs, estate planning options such as trusts can make for scheduled allocations and can help protect inheritances.

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