Gifting to Adult Children During Your Lifetime
I recently met with a couple who had done everything right: saved diligently, invested well, and earned pensions that would more than cover their retirement lifestyle. After running the numbers, it was clear they could live comfortably without touching a large portion of their investments. Based on projected growth, their estate could grow substantially in the coming decades.
Their daughters would likely inherit a substantial amount of money in their 60s, likely as they neared retirement themselves. Right now, their daughters are in their late 30s, starting families and buying houses.
I encouraged them to consider gifting some to them now while they are in the thick of starting their adult lives.
They asked, “What would that look like?”
It’s a thoughtful question. Here's how I helped them think through it.
Projecting Your Estate
First, we modeled their future net worth. With a solid investment portfolio and minimal drawdown needed, their assets were positioned to grow substantially over time. This mirrors a broader trend: many financially successful retirees are likely to leave behind far more than they’ll spend.
According to a 2024 study by Cerulli Associates, households led by individuals over the age of 65 are expected to transfer more than $124 trillion by 2048. That’s a staggering amount of wealth set to move across generations, much of it still sitting in untapped investment accounts.
The Case for Early Gifting
There’s a big difference between inheriting assets at 60 or 70 and receiving financial help earlier in life, especially in your 30s or 40s when careers, home purchases, and child-rearing costs tend to peak.
For many families, gifting earlier means:
Helping with a down payment in a competitive housing market
Paying off high-interest student debt
Funding a new business or career pivot
Supporting grandchildren’s education
Reducing future estate complexity
Rather than giving a windfall when you’re gone, you can witness the impact now—and potentially reduce future estate taxes while doing so.
The Annual Gift Tax Exclusion
One of the simplest ways to start is by using the annual gift tax exclusion. For 2025, the IRS allows individuals to give $18,000 per recipient tax-free. For a married couple, that means they can jointly give $36,000 per child each year without filing a gift tax return or affecting their lifetime exemption.
What most people don’t know is that they can give larger amounts without paying any taxes. That is because the lifetime gift tax exclusion is a whopping $13.99 million in 2025. That means that you would have to give more than that during your life or at death to have any taxes to pay. This amount is in addition to the annual exclusion of $18,000
For example, if you decide to gift $50,000 to your child for a down payment, $18,000 goes tax-free to your child, and on form IRS 709, you claim the remaining $32,000 as a reduction to your $13.99mm lifetime exclusion, leaving plenty to gift over your remaining life. So, while it does require an extra form on your taxes, you don’t have to pay any taxes for this gift.
Starting Small
Early gifting doesn’t mean giving away your entire nest egg. For this couple, we discussed starting small: testing out $5,000 to $10,000 per year for each child for a year, then reassessing. Others might give more around major milestones, such as home purchases, births, or career transitions.
Start with an amount that feels right, keep it separate from your emergency or lifestyle funds, and give yourself the freedom to adjust each year. Here are some of the small ways I’ve seen gifting play out:
Gifting $1,000 at Christmas when they usually give $100.
Funding a maximum Roth IRA contribution ($7,000) for their child every January.
Fund a home improvement project they mentioned wanting to get done.
Contribute to a 529 for their grandchildren.
If you’ve built more than you need, consider giving while it counts the most!
Happy Planning,
Alex
This blog post is not advice. Please read disclaimers.