There are many problems that can arise from “DIY”or Do-It-Yourself Estate Planning. This practice has become more common with gifts of real estate property where little or no money is exchanged. One of the more common mistakes with DIY Estate Planning usually occurs when a person fails to file his or her gift tax. Now, the IRS is increasing its enforcement of the gift tax and are specifically looking for this type of transaction. What makes this troubling is that the failure to do so could result in criminal penalties. The fact that lifetime gift tax exemption is $5 million adds insult to injury because it is unlikely that most taxpayers will incur any tax.
To ensure that a taxpayer is in compliance, that taxpayer might want to consider speaking to an attorney. The consequences for not filing vastly outweigh any costs that could result from filing a gift tax or seeking help from an attorney.
See Robert L. Firth, Estate Planning & Gift Tax in California: DO NOT “Do-It-Yourself”, JDSupra, May 16, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
