Financial Planning Fridays #128: Gifting to Loved Ones

Many of our clients are in the fortunate position of having saved and invested more than they’ll ever need during their lifetime. So today, I want to share some of the most effective and meaningful ways we help them to transfer their extra wealth to their children, grandchildren, and other loved ones. Giving money to your children and grandchildren is about more than finances or estate planning. It’s about creating opportunities, instilling values, and building a legacy for generations to come. Ok, let’s start with the annual gift exclusion. In 2025, you can gift up to $19,000 per person per year without the need to file a gift tax return. And even if you decide to give more, you won’t trigger any immediate taxes as long as the total remains under your lifetime gift and estate tax exemption, which is currently $13.99 million per individual. Education is another powerful gift. By funding 529 plans for your children or grandchildren, you can save for their college or graduate school expenses while benefiting from tax-free growth. What’s even better? You can ‘superfund’ the account by contributing five years’ worth of gifts upfront, $95,000 per beneficiary, without triggering gift taxes. It’s a very effective way to make a big impact on a loved one’s future. Finally, you can also pay for someone’s educational or medical expenses directly. These payments are not considered gifts, so they don’t count against your annual or lifetime exemptions. Once your children or grandchildren start working, you can help them get a head start on retirement by funding a Roth IRA on their behalf. You can contribute up to $7,000 per year to their account, and the money will grow tax-free for the rest of their lives. One of the most impactful longer-term strategies we’ve implemented at Presilium is setting up irrevocable trusts for our clients’ children and grandchildren. For example, you can transfer $1,019,000 into a trust today, by using $1 million of your lifetime exemption. Over time, as that trust grows to $2 million, $3 million, or even $5 million, all the growth remains outside your taxable estate, allowing your loved ones to benefit significantly without impacting your exemption further. You can also add provisions to this trust that will protect your loved ones. At Presilium, we’re here to guide you through these strategies and ensure your generosity is as impactful and tax-efficient as possible. If you’d like to learn more about these options, please don’t hesitate to reach out. Together, we can design a plan that brings your vision for your family’s future to life. Thank you and I look forward to talking with you next Friday morning. Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.