Depending on which source you believe, the rapidly dwindling population of the “Greatest Generation” and their Baby Boomer children are expected to bequeath anywhere from $40 to $80 trillion in assets to their own children and grandchildren over the next decade or so.
Most of these benefactors choose to pass on most of their wealth after their death. But is this always the best strategy?
By the time these parents are gone, their middle-aged children may have reached a level of success that makes an inheritance more of a “nice to have” than a financial lifeline.
These same children may benefit more if they receive monetary gifts earlier in their lives, when they’re just starting their careers or during times of financial duress.
The many uses of lifetime gifts
Giving money to children and grandchildren while you’re still alive can make a far more meaningful impact in their lives—and one that you can witness firsthand.
- Giving money to financially struggling children and grandchildren when they need it most can help them pay off college loans, reduce credit card debt, or help pay for a down payment on a home.
- Grandparents can contribute up to a lifetime total of $95,000 per person to each grandchild’s 529 College Savings Plan to help pay for their future college costs.
- Parents can use lifetime gifts to “reward” children who achieve certain milestones in life. For example, they may give a specified amount of money when a child graduates college; lands their first full-time job; moves into their own apartment; gets married; and purchases their first home.
- Parents who are considering downsizing to a smaller home and need to get rid of valuable art and collectibles can decide “who gets what” or allow their children to choose what they’d like to keep.
- Making large donations to charitable organizations enables donors to experience firsthand how their gifts are being put to work. These gifts may also offer sizeable tax deductions.
- Transferring some of their wealth sooner rather than later may help benefactors reduce their future tax burdens and shrink the size of their estate.
Gift taxes won’t be an issue for most
One reason why some people are hesitant about lifetime giving is that they’re worried that they—or their gift recipients—may have to pay gift taxes.
For recipients, this isn’t true at all. They never have to pay or report taxes on any gifts they receive from family members.
And 99% of benefactors will never have to pay gift taxes.
Why? Because in 2025 the IRS lifetime gift tax exclusion is $13,990,000 per individual. And this number generally rises each year.
This means that unless the amount of your total reportable lifetime gifts exceeds this amount, you’ll never have to pay gift taxes.
You may not have to report gifts, either
In 2025, you can give up to $19,000 a year to anyone without having to report this gift to the IRS.
In fact, you can make separate gifts of $19,000 or less to as many people as you want with no gift tax consequences.
However, if you do give more than $19,000 to one person, you must report this amount on IRS Form 709 and file it with your tax return for the tax year in which the gift is made. This form tracks your total lifetime gifts (but only those over $19,000).
But again, this is just IRS paperwork. Unless you’re a one-percenter, your total reportable lifetime gifts will be a small fraction of your nearly $14 million lifetime gift tax exclusion.
It’s not an either/or situation
Of course, you don’t have to choose between giving while living and leaving an inheritance. For example, you could use lifetime gifts to provide financial support to your children and grandchildren during the years when they need it most and then arrange for them to inherit the rest of your wealth when you pass on.
Certain kinds of trusts enable you to remove both monetary and physical assets such as property and investments from your estate (thus bypassing probate) and allow you to establish formalized conditions and timeframes for distributing these assets to beneficiaries while you’re alive and after your death.
Choosing how to distribute your wealth while you’re alive and after you’re gone can be a complex task. That’s why you may want to meet with a estate planning professional or a financial advisor before you make any gifting decisions.
This article was authored by Chris Gullotti and Jeffrey Briskin. Chris is a financial advisor and Partner with Canby Financial Advisors, a SEC-registered investment adviser. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or training. Chris can be reached at 508.598.1082 or cgullotti@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
©2025 Canby Financial Advisors.