7 Gifting Ideas for Your Wealth Transfer Plan

Benjamin Haas |

Wealth Transfer Planning 5 of 6



In wealth transfer planning, we often think of how we want to distribute our assets upon death. But what is sometimes overlooked is the opportunity to give assets away prior to death, which, in some cases, may be a better way to meet your goals and objectives. Not only does gifting reduce the size of your estate (and therefore the potential tax liability too) but you also get the satisfaction of witnessing the benefits of the gifts.

You should first carefully consider the “who, what, why, when and how” of gifting. For example, is the donee ready to receive your gift, or should you define and outline expectations? Are you ready to fully relinquish control, or do you need a retained interest for income or peace of mind?

Once you’ve defined your gifting goals, here are 7 ideas to consider as part of your lifetime wealth transfer plan.

For outright gifts:

  1. Use the exclusion. If anyone can gift $14,000/year1 to any individual, that means that married couples can give twice as much - $14,000 each to the same child. Depending on the circumstances, you could be providing great assistance to your children when they need it the most (paying down a mortgage, helping with college expenses, etc.) if you plan to leave it to them as an inheritance anyway.
  2. Note there are medical and educational exclusions. That means that payments that you make on someone's behalf for qualified tuition or medical expenses do not count towards the annual limit for gift tax purposes. You could pay for your grandson’s education and still gift him $14,000/year if you wanted to.

For retained interest:

  1. Using a grantor retained trust. This is a type of irrevocable trust to which you transfer assets in an effort to remove them from your estate, while retaining an income interest for a specified period. What’s left goes to your beneficiaries at that time.
  2. Charitable trusts with a retained interest. The same can be said for using a charitable trust, where assets are gifted to remove them from the estate, but an income stream back to the donor is received for a specified period of time. Proceeds eventually go to charity.
  3. The family limited partnership (FLP). If there is a family business, you could transfer interest to your kids while alive. As the general partner, you would maintain control over the operations while gifting limited interests to family members over time. There could be significant tax savings for gifting this way since the value of the gifts may be discounted.

For gifts to trusts:

  1. Gifting through life insurance. If you wanted to gift, but feel that your money could be better invested for growth or leverage over time, you might consider using a life insurance trust. The trust isn’t included in your estate, and may help you turn $1 into $2 for your heirs.
  2. Use stipulations. If you don’t completely trust the donee, you can stipulate certain conditions for the withdrawal of the money. For example, it’s common to disallow principal withdrawals before the child reaches a certain age. Give the gift now, but let them mature.

In the end, gifting isn’t for everyone. But there are benefits, both financially and emotionally, to considering your plan for wealth transfer while living, and not just planning for what happens at death.


1Gifting rules state that any individual can gift up to $14,000/year to any other individual, without having to file a gift tax return. There is also a lifetime exclusion of $5.49 million for gifts.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax or legal issues with a qualified tax advisor or attorney. Haas Financial Group, US Financial Advisors and LPL Financial do not provide tax or legal advice and/or services.

Securities offered through LPL Financial, Member FINRA and SIPC. Investment advice offered through U.S. Financial Advisors, a registered investment advisor. U.S. Financial Advisors and Haas Financial Group are separate entities from LPL Financial.



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