Life Events Helping clients build a strategic gifting plan

Here’s one of the biggest challenges facing those with wealth: giving it away to loved ones. 

To start with there’s the tax code, with its endlessly evolving rules and regulations. From there it only gets trickier. Because distributing wealth to loved ones typically involves something even more complex than taxes: family and personal dynamics. Emotions can run high with sibling rivalry, blended families, varying needs of beneficiaries and questions of relinquishing versus retaining control all part of the equation. And if you are giving while living, these questions become even more pronounced. 

Happily, the gifting coin has a second side: The joy and transformation gifts bring to recipients, and the pleasure and satisfaction donors experience upon seeing their wealth improve the lives of loved ones. And let’s not forget the tax benefits. 

If that coin somehow had a third side, it might belong to advisors. As an advisor you can help clients secure their legacies while also helping to maximize their tax benefits. How you approach the topic may also help strengthen your bond with clients and showcase your value to multiple generations of family members.

Here are 6 areas to focus on as you support clients in developing their plan for giving while living. Together with our conversation guide and investor-facing informational brochure, they’ll help you deliver substantial value in this important planning area.

1. Assess the feasibility and advisability of gifting

Separate from charitable giving, gifting is more about clients gifting to loved ones during their lifetimes. For clients who wish to do this, the first question should be whether this goal is achievable given their current financial plan.  Gifting plans should not compromise a client’s financial security. As a neutral party with a holistic understanding of clients’ financial circumstances, you can help ensure that a desire to be generous doesn’t put client needs at risk. 

2. Understand clients’ gifting philosophy

Before helping clients build their plan, it’s essential to know what they aim to achieve through gifting. Are they seeking to relieve the financial burdens of their loved ones, take control of how their wealth is distributed, extend their philanthropic ambitions or, for the very high-net-worth, mitigate their estate tax burden? For most, multiple objectives are in play, yet few have formulated their philosophy let alone committed it to paper. Helping them nail it down takes time but the client insights you’ll gain make it time well spent.  

Asking thoughtful questions can help you see beyond the numbers and get insight into what’s driving their decisions — such as the family’s internal financial dynamics, views on earning and spending and the level of control donors are seeking over the money they wish to give away. 

3. Conduct a gifting assessment

Advising clients requires a full accounting of their giftable assets and an assessment of the pros and cons of each as it relates to gifting. Conducting an assessment ahead of client meetings demonstrates your strategic capability and holistic approach.

It also comes with a secondary benefit: A thorough gifting discussion affords advisors a panoramic view of client assets and often surfaces information valuable to financial planning efforts. With more information in hand, you can help tailor a tax-efficient gifting strategy built around their unique objectives.   

The following six dimensions provide a useful framework for conducting a gifting assessment:

• Tax efficiency: Giving cash is easy, but not tax efficient. The opposite may be true of a business interest. Chances are, clients don’t know the nuances but you do. Stress to them the importance of consulting you before they gift.  
• Liquidity: Is an illiquid gift being given to someone who would benefit from liquidity? Or vice versa?  You can help donors and recipients understand the relative liquidity of their assets. 
• Method of transfer: Sometimes, handing over assets is as simple as writing a check. But for those with more complex needs or asset types, trusts and similar vehicles may be necessary to achieve client aims. You can apprise clients of options and connect them to specialists well versed in them.
• Ease of valuation: Valuing assets like company ownerships or jewelry and collectibles can be complex and expensive. You can help clients understand the challenges as well as the up-front — and ongoing — costs.
• Discounting: Many clients won’t be aware that the taxable value of certain types of gifts can be reduced based on factors such as lack of marketability or lack of control. You can introduce this important consideration.
• Complexity: The proliferation of gifting vehicles arose in response to client needs. But clients with specific — and perhaps in their minds, unusual — objectives may not realize there are vehicles to help them pursue those objectives. Together with tax- and estate-planning specialists, you can work to tailor solutions. 

4. Promote tax-aware gifting

With gifting, multiple tax types are in play. The three biggest are gift taxes, estate taxes and income taxes. Providing effective guidance means sharing the basic rules related to each and staying on top of changes that impact planning. 

For example, clients who once may have employed gifting to remove assets from their estate to minimize or avoid estate taxes may have less to be concerned about due to provisions in 2025’s One Big Beautiful Bill Act. The bill eliminated the so-called sunset provision that would have caused the lifetime gift exemption to revert to its pre-2018 level of approximately $7 million per person and significantly increased the exemption to around $15 million for individuals ($30 million for married couples). The bill also indexed the exemption to inflation beginning in 2026, meaning that it could increase annually. As a result, even fewer people will be affected by estate taxes.

5. Share the full range of gifting strategies and vehicles 

In terms of complexity, there’s a full spectrum of gifting vehicles and strategies. Direct asset transfers involve little more than writing a check or signing over securities while trust-like vehicles typically require the involvement of tax- or estate-planning specialists. In the middle are some purposeful strategies that may serve specific client needs and objectives.

Once you’ve assessed a client’s assets and tax picture, you can walk them through the range of strategies and vehicles available to them, including:

6. Prepare for complex gifting scenarios

Invariably, clients will present complex objectives that call for specialized planning vehicles such as trusts. Understanding how different structures might be used in common client scenarios can help you make the leap from tactical ideas to practical outcomes.

Scenario #1: Your client understands the tax benefits of making a gift, but is reluctant to give up access to the assets: If clients want the tax benefits of giving away assets, but are concerned about losing access to the assets (and the future appreciation), consider gifting structures that allow them to retain some access to the gifted assets — e.g., a spousal lifetime access trust, or SLAT. This is often the case with younger clients who, by creating a SLAT, can utilize a lifetime exemption to remove assets and appreciation from their estate, while maintaining indirect access to the assets through their spouse’s beneficial interest. SLATs have many advantages, but some drawbacks and complications, particularly if clients live in a community property state, or if they divorce or a spouse dies.

Scenario #2: Your client has an asset that is expected to substantially appreciate: They may have assets that are currently depressed or low in value but are expected to rebound or appreciate significantly. In this scenario discussing estate “freeze” techniques with an estate planning attorney may make sense. With estate freeze techniques, clients are not gifting an entire asset, but rather the future appreciation. These gifting structures are intended to “freeze” the value of the asset in the client’s hands as of the date of the transfer, thereby removing the future appreciation from the estate. Some of the more popular freeze techniques include: grantor-retained annuity trusts (GRATs) and intra-family loans.

Scenario #3: Your client is transferring a business: Transferring businesses and business interests can be complex and, in many cases, high stakes. For one, they raise questions of fairness, as distribution among family members may not be equal. They also touch on income and estate taxes which should both be considered when structuring the terms of the gift of a business interest. For example, beware cases in which clients are considering selling a business at a “bargain” price to a family member. That’s because if shares are sold at below market value, or for nothing, that could be considered a gift and subject to capital gains taxes.

These scenarios are just the beginning. To help manage the complexity, most advisors will want to enlist the help of estate-planning and tax-planning specialists such as trust and estate attorneys to identify suitable solutions to innumerable client challenges.

Above all, effective gifting guidance goes beyond understanding tax laws or mastering the ins and outs of different trusts. It’s about understanding the client’s mindset and priorities, navigating the family dynamics and implementing a plan that improves the lives of recipients and donors alike.