If you’ve ever wondered when to pass on wealth to your children, you’re not alone. Many of our clients wrestle with this same question—they want to help their children today without jeopardizing their own security tomorrow. There’s no one-size-fits-all answer, but understanding the trade-offs and tax rules helps you make an informed and thoughtful decision for your family while safeguarding the legacy you’ve built.
Gifting Money During Your Lifetime
The Upside
See the Impact of Your Generosity
Helping a child buy a first home, paying for a grandchild’s education, or taking the family on a vacation can all be incredibly rewarding. You get to enjoy the benefits with your family.
Potential Tax Benefits
Gifting can help reduce the size of your taxable estate. In 2025, you can give up to $17,000 per recipient ($34,000 for married couples) without filing a gift tax return. Larger gifts can count against your lifetime estate and gift tax exemption, meaning you can give up to $12.92 million without paying gift tax.
Opportunity for Guidance
Giving during your lifetime opens the door for conversations about saving, investing, and values—helping your children build financial confidence.
Addressing Immediate Needs
Life happens. Gifting now lets you support your children when they truly need it. Sometimes support is most meaningful in a child’s 30s or 40s, not decades later when they’re already financially established.
Things to Watch Out For:
Risk of Dependency
Frequent or substantial gifts might foster financial dependency, especially if children come to expect ongoing support.
Impact on Your Security
Be sure you’re not compromising your own retirement or long-term care needs before making significant gifts. Your financial advisor can build gifts into your plan and illustrate the impact.
Family Dynamics
Unequal or unexpected gifts can cause tension among siblings or family members. Transparency and communication are key to avoid misunderstandings.
The Case for Leaving an Inheritance
Pros
Retain Control Over Assets
Your assets can be used however you need them in your lifetime, and your estate plan allows you to specify how your assets will be distributed after your passing. This control helps to ensure your wishes are honored and can include stipulations through trusts or conditions for inheritance.
Preserve Financial Flexibility
Keeping your wealth until death gives you confidence and flexibility to address future needs.
Take Advantage of Step-Up in Basis
Inherited assets often received a step-up in basis, which minimizes capital gains taxes if your heirs sell appreciated property such as stocks or real estate. This means more money stays in the family.
Streamline Distributions
For parents with multiple children or complex family dynamics, a well-crafted estate plan can simplify how your wealth is divided and reduce potential conflicts.
Cons of Leaving Money in an Estate
Delayed Access
Probate and estate administration can take time. Your family might face delays in accessing funds when they need them most.
Potential for Disputes
Even with a solid estate plan, emotions and expectations can lead to disagreements among heirs.
Tax Implications
If your estate exceeds the federal exemption ($12.92 million in 2025) or if your state has an estate tax, your heirs could face tax liabilities. Strategic planning may help to reduce estate taxes.
Lost Opportunities
Your family may miss out on support when it matters the most, like recovering from a hardship.
Practical Tips for Balancing Gifting and Estate Planning
Most families benefit from a hybrid approach—making thoughtful gifts during your lifetime while also preserving a legacy through your estate.
Assess Your Financial Situation
Before making significant gifts, evaluate your financial security. Work with a financial advisor to stress test gifts against your retirement, lifestyle, and health
care goals.
Communicate Openly
Avoid surprises. Share your plans and the reasoning behind them to help manage expectations and reduce misunderstandings.
Use Trusts for Flexibility
Trusts can provide a middle ground between gifting and estate planning. For example:
- Revocable living trusts allow you to retain control of assets during your lifetime while specifying how they’re distributed after your passing.
- Irrevocable trusts remove assets from your taxable estate and provide immediate benefits to beneficiaries.
Consider Timing and Need
Evaluate your children’s financial situations and life stages. A young adult starting a career might benefit more from a gift now, while an older, financially secure child may prefer to inherit later.
Review Your Estate Plan Regularly
Life circumstances and tax laws change; so should your plan. Regularly review and update your estate plan to help ensure it aligns with your goals and current regulations.
Designing Your Family’s Plan
At Gertsema Wealth Advisors, we help families craft personalized, tax-efficient plans for transferring wealth across generations. We’ll model “give-now vs. give-later” scenarios, translate tax rules into plain English, and build a strategy that fits your values and your legacy. Contact us today to schedule a complimentary planning meeting.
