Navigating the New Wealth Transfer: Giving While Living

Are you considering how to support your children financially while ensuring your own retirement remains secure? The trend of giving while living is gaining momentum among wealth managers and their clients. This approach allows families to transfer assets to their heirs during their lifetimes rather than waiting for inheritances, addressing immediate needs like student loans or home purchases. According to experts, this shift not only enhances family support but also encourages strategic estate planning that safeguards long-term financial stability.

Jody King from Fiduciary Trust Company emphasizes the importance of starting conversations around gifting with a clear understanding of clients’ goals. By aligning current desires with future needs, clients can identify how much they can give without jeopardizing their retirement. Strategies can incorporate annual gifting options and charitable contributions, ensuring a balanced approach to wealth transfer that aligns with personal values.

Tax-efficient gifting is a critical component of this process. With the federal estate tax exemption poised to increase from $13.991 million to $15 million per person on January 1, 2026, it’s a prime opportunity for families to consider irrevocable trusts. These trusts allow assets to grow tax-free while the grantor pays the income tax on trust income, effectively removing future appreciation from their estate.

However, advisors warn against common pitfalls that could undermine the benefits of giving. For instance, over-funding gifts can inadvertently create financial dependence in children, or gifting low basis assets can shift tax burdens. King advises using tools like annual exclusion gifts—currently $19,000 per recipient in 2025—to facilitate transfers without triggering gift tax. This method, along with direct payments for education or medical expenses, can streamline the giving process while maintaining financial prudence.

As you consider your own estate planning, think about how you can incorporate giving while living into your strategy. Engaging with a wealth advisor can provide insights tailored to your unique situation, balancing generosity with financial independence. Starting this conversation sooner rather than later could significantly impact your family’s financial landscape, ensuring that your legacy supports both the present and future needs of your loved ones.

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