The Gift That Keeps On Giving: Estate Planning Through Gifting

​When most people think of estate planning, they imagine wills, trusts, and posthumous distributions. But one of the most powerful and underused tools in estate planning is gifting during your lifetime. Strategic gifting not only allows you to witness the impact of your generosity but also offers significant tax advantages and simplifies wealth transfer. In essence, gifting is the gift that keeps on giving—both for your loved ones and your financial plan.

Why Gifting Is a Smart Estate Planning Strategy
Gifting allows you to transfer wealth gradually, reducing the size of your taxable estate while providing immediate benefits to your heirs or favorite causes. Done wisely, it can help:

• Lower or eliminate estate taxes
• Minimize probate complications
• Provide support to children or grandchildren when they need it most
• Strengthen family relationships through intentional generosity
• Allow you to shape your legacy during your lifetime

6 Ways to Use Gifting in Your Estate Plan
1. Take Advantage of the Annual Gift Tax Exclusion
As of 2024, you can give up to $18,000 per recipient per year (or $36,000 for couples) without triggering the federal gift tax. This exclusion resets annually and doesn’t count against your lifetime gift and estate tax exemption.

Example: You and your spouse can gift $36,000 each to your two children and four grandchildren every year—distributing $216,000 tax-free annually.

2. Utilize the Lifetime Gift Tax Exemption
Beyond the annual exclusion, you can use your lifetime gift and estate tax exemption—currently set at $13.61 million per individual in 2024. This allows you to make larger gifts (such as property or business shares) without paying federal gift tax, though it reduces the amount you can shield at death.

Tip: Track gifts that exceed the annual exclusion with IRS Form 709 to apply them toward your lifetime exemption.

3. Pay for Educational and Medical Expenses Directly
The IRS allows unlimited tax-free gifts for tuition and medical expenses, as long as you pay the institution or provider directly.

This strategy is perfect for covering a grandchild’s college tuition or helping a family member with significant medical bills—without using your annual exclusion or lifetime exemption.

4. Gift Appreciated Assets to Avoid Capital Gains
Donating stocks, mutual funds, or real estate that have appreciated in value can be a tax-efficient strategy. The recipient may benefit from lower capital gains rates when they eventually sell, especially if they’re in a lower tax bracket.

Note: Gifting appreciated assets to charities may allow you to avoid capital gains entirely while earning a charitable deduction.

5. Use Irrevocable Trusts to Gift with Control
Want to make large gifts but retain some control over how they’re used? Consider setting up:

• A Crummey Trust (for minors)
• A Grantor Retained Annuity Trust (GRAT)
• A Spousal Lifetime Access Trust (SLAT)
• A Charitable Remainder Trust (CRT)

These trusts can help reduce your taxable estate while preserving access or control under specific terms.

6. Gift to Charities and Foundations
Charitable giving is not only fulfilling—it’s tax-efficient. You can donate cash, assets, or set up a Donor-Advised Fund (DAF) for structured giving, allowing you to maximize deductions and reduce estate taxes while supporting causes you care about.

Common Gifting Mistakes to Avoid

• Failing to document gifts properly
• Not coordinating gifting with your overall estate plan
• Over-gifting without considering your long-term financial needs
• Forgetting to file a gift tax return (Form 709) when required
• Assuming all gifts are tax-free—state laws may differ

Always consult with a financial advisor or estate attorney before making large gifts.


Final Thoughts
Gifting isn’t just about reducing taxes—it’s about sharing your wealth intentionally while you're alive to see it make a difference. With thoughtful planning, gifting can provide long-term benefits to your family, streamline your estate, and ensure your legacy is shaped by generosity.

Because when you give with purpose, you build a legacy that lives on.

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Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.