Keep More in the Family Reduce Taxes With Strategic Gifting
When planning your legacy, gifting during your lifetime is thoughtful and strategic. Not only do your loved ones receive an early boost, but you may also shield more of your estate from federal taxes. Let’s break down six smart, actionable, and strategic ways across all states. Tap the annual gift tax exclusion. Every year, you can gift up to $19,000 per person (or $38,000 if married filing jointly) without trimming into your lifetime exemption or filing a gift-tax return. The best part is you can repeat it and share the love with an unlimited number of people. Over time, that’s a significant aggregation of tax-free transfers. Use your lifetime exemption. In 2025, the lifetime exemption is at $13.99 million per individual (and nearly $28 million for couples). In July 2025, Congress made the exemption amount permanent, so speculation about it dropping to half in 2026 has been laid to rest. In fact, the lifetime gift and estate tax exemption will increase to $15 million ($30 million per couple) on Jan. 1, 2026.
Make direct payments that don’t count as gifts. You can pay unlimited amounts directly to medical providers or educational institutions for someone else's benefit. These payments bypass the annual exclusion and the lifetime exemption limits, making them powerful and clean ways to help without tax consequences. Leverage trusts for smarter transfers. Qualified Personal Residence Trusts (QPRTs): Transfer your home to a trust while retaining the right to live there for a set term. The gift’s taxable value is reduced thanks to the IRS’s calculation of your retained interest, meaning you minimize the use of your exclusion and remove future appreciation from your estate. Just be sure to outlive the term to reap the benefits. Intrafamily Loans: Loan money to loved ones at the IRS’s minimum applicable rate (when interest rates are low). If assets purchased with those funds appreciate, that growth shifts out of your estate and no gifting is required (unless you later forgive the loan).
Explore upstream gifting. If your parents or grandparents have estates far smaller than yours, you might gift appreciated assets upstream, allowing them to hold and later pass the assets down with a useful step-up in basis that reduces capital gains tax for future generations. Avoid estate inclusion with life insurance planning. Putting a life insurance policy into an Irrevocable Life Insurance Trust (ILIT) can remove it from your estate so the death benefit passes tax-free to beneficiaries. But watch out for the IRS's three-year rule: Gifting the policy within three years of your death will bring the full value back into your estate. A great workaround is to have the ILIT purchase the policy outright. Gifting isn’t just financially savvy; it’s personal, philanthropic, and full of upsides for both giver and receiver. Thoughtful planning now lets your legacy grow, live on, and stay largely intact. ABSURD SPLURGES OF THE SUPER-RICH
LUXURY LUNACY
If you’ve never bought your bride a bejeweled toilet or spent $2 million to clear your sinuses, have you ever truly lived? Here are a few jaw-dropping examples of how the mega-rich spend their money. The World’s Priciest Words How much is a centuries-gone genius’s personal insights worth in the modern age? Exactly $31 million. That’s how much Microsoft co-founder Bill Gates paid to purchase one of Leonardo da Vinci’s surviving journals in 1994. Fortunately for the rest of us, Gates chose not to hoard the knowledge contained in the most
$2 Million for Moisture Celine Dion rose to international acclaim via her musical contribution to the 1997 film “Titanic,” but her most lucrative endeavor involved a considerably drier environment. As part of her $100 million deal to perform a residency at Caesar’s Palace in Las Vegas, she requested that a $2 million humidifier be installed on the stage. This demand wasn’t entirely a display of diva attitude; she feared the desert’s dry air would damage her voice and hinder her ability to perform. The extravagant upfront expense proved a small concession for Caesar’s Palace, which ultimately benefited from featuring one of the world’s most popular singers in her prime. High-Flying Headwear From his star-making performance at the 1985 Live Aid concert to humanitarian efforts to end global poverty, U2 frontman Bono has advocated for the advancement of the developing world for decades; however, he still has first-world problems now and then. One day, while in Italy, the globe-traveling vocalist realized he had left his favorite hat in London. Naturally, he did what any of us would do in this situation and paid around $1,500 to have the hat flown more than 1,000 miles to him first-class.
expensive book in history. After scanning the pages, he created CD-ROMs of the documents and made them available to the general public for around $30 a copy. Bank-Busting Bathroom Breaks Even a media-facing megastar like singer/
actress Jennifer Lopez requires valuable alone time. Although her marriage to actor Ben Affleck recently dissolved, there was a time when her former husband lavished her with wondrous gifts … including a custom toilet seat complete with rubies, pearls, sapphires, and diamonds. The posh porcelain treasure reportedly set the actor back $105,000, proving that divorce can flush away more than loving feelings.
2 ∙ Roberts.cpa
Published by Newsletter Pro • NewsletterPro.com
Made with FlippingBook Ebook Creator