Giving While Living: The Joy of Seeing Your Impact

There's something backward about accumulating wealth your whole life, then leaving it all to others after you die. You never see the impact. They receive it when they may no longer need it most. What if you gave while living instead?

The Case for Giving Now

Your beneficiaries may need it more now. A $50,000 gift to your 35-year-old child struggling with a down payment changes their life. The same $50,000 inherited at 65 when they're already comfortable? Nice, but not transformative.

You get to witness the joy. Seeing your grandchild graduate debt-free, watching your daughter open her business, knowing your donation built that library wing. These experiences are lost if you wait until death.

You can guide the use. A gift now lets you explain your intentions, share your values, and course-correct if needed. An inheritance comes with no context, no conversation.

It may be more tax-efficient. Strategic lifetime giving can reduce estate taxes, avoid probate, and take advantage of annual gift tax exclusions.

The Tax Advantages

Annual gift tax exclusion: In 2025, you can give up to $19,000 per person, per year, to as many people as you want, with zero gift tax consequences. A married couple can give $38,000 per recipient.

Lifetime gift tax exemption: Beyond the annual exclusion, you have a lifetime exemption of $13.99 million (2025) before gift taxes apply. This exemption is shared with your estate tax exemption, use it now or at death.

Qualified distributions: Payments made directly to educational institutions for tuition, or to medical providers for medical expenses, don't count against annual or lifetime limits. Pay your grandchild's college tuition directly? No gift tax implications, no matter the amount.

But What If I Run Out of Money?

This is the fear that keeps people from giving. It's legitimate. You can't un-give a gift. But it's also manageable:

Know your floor. Calculate the minimum portfolio needed to sustain you through the worst-case scenario (long life, poor returns, high medical costs). That's your "don't touch" amount.

Give from the excess. Anything above your floor is potentially giftable. If your floor is $1.5M and you have $2.5M, you have $1M of giving capacity.

Give income, not principal. If your investments generate more than you spend, gift the excess income while preserving capital.

Use trusts for control. Irrevocable trusts can transfer wealth while providing some control over timing and use. Work with an estate attorney.

Ways to Give While Living

Direct gifts: Cash, stock, or property transferred outright. Simple, immediate, uses annual exclusion.

529 contributions: Fund education savings accounts for children or grandchildren. You can "superfund" up to 5 years of annual exclusions at once ($95,000 per beneficiary in 2025).

Family loans: Lend money at the IRS minimum interest rate (AFR). If they pay you back, you've helped them access cheap financing. If you forgive the loan later, it becomes a gift.

Matching gifts: Match your children's savings toward specific goals, "I'll match every dollar you save toward a house." Encourages their effort while accelerating progress.

Experience gifts: Fund family vacations, reunions, or experiences. The shared memories may be worth more than the cash.

Charitable giving: Donor-advised funds let you get the tax deduction now while distributing to charities over time. Charitable remainder trusts provide income to you, then benefit charity.

When Not to Give

Giving while living isn't always right:

• Your own needs are uncertain. Health issues, potential long-term care, economic uncertainty, if you're not confident about your own security, hold off.
• Recipients aren't ready. A large gift to someone who can't handle it may do more harm than good. Consider maturity, financial skills, and life stability.
• It creates dependency. Ongoing support that prevents someone from developing self-sufficiency isn't helping. It's enabling.
• It compromises your spouse. Ensure your partner is equally comfortable with gifts. Don't give away their security.

Having the Conversation

Gifts to family work best when communicated openly:

• Explain your intentions and any expectations
• Be clear about whether this is an advance on inheritance (and if so, how it affects estate plans)
• Discuss with all children to avoid perceived favoritism
• Consider a family meeting to share your giving philosophy

Secrets around money cause family conflict. Transparency prevents it.

Getting Started

1. Calculate your security floor: What do you need to never worry?
2. Identify your giving capacity: What's available above that floor?
3. Decide on recipients and purposes: Who needs it? What would help most?
4. Choose the mechanism: Direct gifts, trusts, 529s, charitable vehicles
5. Consult professionals: Tax advisor, estate attorney as needed
6. Have the conversations: Communicate clearly with family
7. Execute and enjoy: Give the gift, then witness the impact