By Ted Stricker, CFP®
Family gifting strategies can reduce future estate taxes by lowering the value of your taxable estate during your lifetime and transferring potential future appreciation out of your estate. These strategies leverage annual gift exclusions and your lifetime gift exemptions. More advanced strategies may require using specific financial vehicles like trusts.
At Bernath + Rosenberg, we aim to weave such strategies within a client’s finances that both serve the aspirations of client families as well as create an integrated, tax-efficient financial plan. Taking the time this coming year to craft and organize your estate planning not only offers benefits today, but also for your family and legacy in the future.
Let’s examine techniques we most often recommend:
Key Gifting Strategies
- Annual exclusion gifts: You can gift up to $19,000 per recipient in 2025 and in 2026 without incurring gift tax or using any of your lifetime exemption. Married couples can combine their exclusions to gift $38,000 per recipient annually. Consistently making these gifts to multiple people over time can significantly reduce the total value of your estate. In addition, you get to experience the benefits these annual gifts bring to your loved ones while you’re still present in their lives.
- Direct payment of qualified expenses: Payments made directly to a medical provider or an educational institution for qualified tuition expenses are not considered taxable gifts and do not count against your annual exclusion or lifetime exemption. This is an effective way to help family members with significant costs while reducing your estate size.
In the case of college or other tuition, remember that direct gifts to the school may affect the student’s eligibility for financial aid assistance, so coordinate such intentions with the student’s parents and qualified advisors.
- Utilizing the lifetime exemption: For larger gifts, you can use a portion of your unified federal gift and estate tax exemption, which is $13.99 million per individual in 2025 (and rises to $15 million per individual in 2026). By using this exemption now, particularly with assets expected to appreciate, you effectively “freeze” the asset’s value for tax purposes at the time of the gift, removing all future appreciation from your taxable estate.
- Gifting appreciating assets: Transfer assets to heirs (such as stocks, real estate, or business interests) that are likely to increase in value is a powerful strategy. The growth of these assets occurs outside your estate, maximizing the tax savings. However, recipients of gifted assets receive a “carry-over” cost basis, which may result in higher capital gains taxes for them if they sell the asset later, as opposed to the “stepped-up” basis inherited assets receive.
Advanced Strategies Using Trusts
For more complex planning, especially with large estates, trusts are a valuable tool.
- Irrevocable Life Insurance Trusts (ILITs): An ILIT is designed to own a life insurance policy. By transferring the policy to the trust (or having the Trustee purchase a policy on the grantor(s)), the death benefit proceeds are excluded from your taxable estate, providing tax-free liquidity for your heirs to pay potential estate taxes or other expenses.
Note that ILITs and their management come with specific rules to follow to make them effective, so guidance by financial, tax, and legal advisors is essential. - Grantor Retained Annuity Trusts (GRATs): You can transfer appreciating assets into a GRAT and receive an annuity payment for a set term. If the assets outperform the IRS’s set rate of return, the excess value passes to your beneficiaries free of gift or estate tax.
- Spousal Lifetime Access Trusts (SLATs): A SLAT allows you to make a gift in trust for the benefit of your spouse (and potentially children), removing the assets from your estate while still allowing the beneficiary spouse potential access to the funds if needed.
- Charitable Remainder Trust (CRTs): We are a big fan of CRTs, due to the potential of these trusts to serve several objectives for the clients and families we serve. CRTs may receive appreciated assets, thereby removing these values from the donor’s estate.
The trust then pays an income to the donor and/or other non-charitable beneficiaries for a set period, which can be the donor’s lifetime or up to 20 years. This feature may provide income for retirement or to support loved ones for a limited time. After this period has expired, the “remainder” goes toward a designated charity or special cause, thus fulfilling charitable intentions or legacy and philanthropic objectives. - Family Foundations: Higher-net-worth families may consider creating their own private family foundation to both reduce potential estate taxes and to promote a family’s values and support cherished causes they believe in. Such foundations may also allow participation by family members that help to teach financial concepts and pass on philanthropic faith-based values to future generations.
Important Considerations
- Loss of control: Gifting requires relinquishing control and ownership of the assets. Once a gift is made, it belongs to the recipient or the trust.
- Filing requirements: Gifts exceeding the annual exclusion amount require filing IRS Form 709 to track the use of your lifetime exemption, even if no tax is immediately due.
- State taxes: Be aware of state-specific gift or estate taxes, as they may have different rules and thresholds than federal law, especially in NY, NJ, or FL.
- Professional guidance: Estate tax laws are complex and (as we saw during the past year with the OBBBA legislation) are always subject to change. Consulting with experienced wealth advisors, an estate planning attorney, or a tax professional is crucial to align strategies with your goals and comply with all legal requirements.
If You Have Estate Planning Questions, Let’s Have a Discussion!
Choosing and implementing estate tax strategies can be confusing and complex, but our team is here to help!
By coordinating your estate tax planning with your overall financial planning and long-term goals, our assistance could be beneficial to your financial future. With our Certified Public Accountants and CERTIFIED FINANCIAL PLANNER® professionals, Bernath + Rosenberg stays current with the latest in tax laws and planning strategies to help you pursue a rewarding and comfortable retirement, according to your unique and special objectives.
To get started in creating a solid, tax-efficient estate plan in 2026, schedule a meeting by calling (212) 221-1140 or email tstricker@brwealth.com.
Frequently Asked Questions
1. How do I balance supporting my family and giving to charity in my legacy plan?
Balancing family support and charitable giving starts with clearly defining priorities and understanding how different assets are taxed. Retirement accounts, taxable investments, trusts, and insurance each serve different roles. A coordinated plan can help your family stay financially stable while also supporting causes that reflect your values, without unintentionally increasing taxes or reducing flexibility.
2. When does it make sense to involve heirs in legacy or charitable planning?
Involving heirs earlier can be beneficial when education, values, and long-term stewardship are part of your goals. Some families choose to include children or grandchildren in discussions around charitable giving or family trusts to help prepare them for future responsibility. Advisors at Bernath + Rosenberg often help families structure these conversations in ways that encourage clarity rather than conflict.
3. Should legacy planning be reviewed regularly, or only after major life events?
Legacy planning should be revisited regularly, not only after major events like retirement, the sale of a business, or the loss of a spouse. Tax laws change, family dynamics evolve, and financial circumstances shift over time. Periodic reviews with a planning team such as Bernath + Rosenberg can help your legacy strategy continue to reflect both your intentions and current tax realities.
About Ted
Ted Stricker is a partner and financial advisor at Bernath + Rosenberg, a full-service accounting, tax, and wealth management firm with offices in Monsey, NY, Lakewood, NJ, Cedarhurst, NY, and Miami Beach, FL. The firm demonstrates a personalized approach to custom-tailored solutions and an unwavering commitment to client service. With over 26 years of experience in
the financial services industry, Ted manages the firm’s wealth management team, and specializes in designing financial plans for business owners and affluent families. Since joining the team in 2015, he provides practical and sound advice, combining innovative approaches and solutions that reflect clients’ personality, lifestyle, and goals.
For the ninth year in a row, Bernath + Rosenberg has been named as one of the leading CPA firms in financial planning by Accounting Today, a publication that receives hundreds of submissions each year and features the Top 150 Firms in the nation. Ted is a CERTIFIED FINANCIAL PLANNER® practitioner and is a member of the Financial Planning Association. To learn more about Ted, connect with him on LinkedIn.
