Depending on the extent of your assets, you may have the power to do a great deal to help your extended family in a number of ways. And the beauty part of it is that it’s often possible to do so with resources that would have otherwise gone into the coffers of the IRS.
Exactly how you want to plan your inheritances is a personal decision, but there are those who adjust on the fly and consider the needs of family members as they unfold. Medical problems of family members are not something that you can anticipate or plan for, but you can react to them if you choose to do so. With the high cost of health care and long-term care today it is very possible that someone who is dear to you could benefit from some help paying these costs.
Many would be more than willing to step in regardless of the circumstances, but it so happens that there is a tax advantage that goes along with picking up someone’s medical expenses. According to IRS regulations you can pay the medical bills of an unlimited number of people equaling any amount of money free of the gift tax. So if the overall value of your estate exceeds the estate tax exclusion amount, which is just $1 million in 2013, any medical gifts that you give will reduce the taxable value of your estate. So medical gift giving can be a total win-win situation if certain conditions exist.
Aside from paying for treatments you can also pick up the tab for stays in an assisted living facility or nursing home free of the gift tax under certain circumstances. Plus, the IRS rules allow you to give health insurance as a gift to an unlimited number of recipients, and this can include some types of long-term care insurance.