What is the difference between a lifetime gift and a testamentary gift?
A lifetime gift and a testamentary gift are both forms of inheritance in California, but they are quite different in certain ways. A lifetime gift is something that is given by the giver during their lifetime, and can be either given to the beneficiary directly, or placed into trust for the beneficiary to receive at a later time. A lifetime gift does not require a will, and is typically given with the intention of avoiding the probate process. A testamentary gift, on the other hand, is what is included in a will and only passes to the beneficiary after the giver’s death. Testamentary gifts must go through probate court before they are distributed, and the process of probate can be lengthy and expensive. Additionally, testamentary gifts are typically subject to estate taxes, whereas lifetime gifts are not. The key differences between a lifetime gift and a testamentary gift are when the gift is given, how it is distributed to the beneficiary and the associated taxes involved. Lifetime gifts are given prior to the giver’s death, can be distributed without probate court and are not subject to taxes. Testamentary gifts, on the other hand, are given after death, must be distributed through probate court and are subject to taxes.
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