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It’s decision time if you who want to take advantage of the $5.12 million gift tax exemption that expires at the end of this year. While cash is the most direct way to pass wealth to heirs, you might need that money at some point.

If you’ve already given it away, it’s not as easy to get some of it back. An interesting recent article in the New York Times (http://tinyurl.com/9vhpzyx) highlighted the benefits and risks of leaving heirs investment properties.

Not the Homestead

Keep in mind, I’m not talking about you leaving multiple heirs the family home, which the article points out can be more complex than you might expect.

What if one child has no desire to maintain the family home? What if the adult children squabble over who can use it and when? What if two of them want to sell it for cash, but a third child’s spouse is opposed because the grandchildren haven’t had enough holidays spent in it?

Instead, the article talks about other kinds of properties — farms, ranches, buildings and timberland. These types of property often carry less personal or emotional value for heirs. They also can produce income and, when placed in a properly drafted Trust, such legacies can keep a family together for generations.

Important Considerations

Giving away property isn’t as simple as giving away cash. There are important questions to review to help you understand that the future isn’t always predictable.

For instance, how can you ensure the property will be well managed for the next four or five decades? Who will administer the Trust? What if the property operates as a business? Also, what should be done if a beneficiary wants to sell his stake in a property? A Trust needs to be drafted so beneficiaries have a clean way out.

 Avoiding Conflicts

If there’s income, everyone wants a share. Sibling rivalry can, and often will, rear its ugly head. Talk about making distributions fair. Finally, heirs beget heirs. Over time, there can be smaller ownership stakes as grandchildren and great-grandchildren enter the picture. Talk about how this can affect the legacy you want to leave behind.