Gifting Strategies

Thoughtful Ways to Share Wealth and Plan for the Next Generation

Gifting strategies often sit at the intersection of financial planning and estate planning. We frequently have gifting conversations with clients when it becomes clear that there will be excess assets left over to pass on to the next generation.

At that point, the question often becomes:

Would you rather your children and grandchildren receive their inheritance after you’re gone, or would you prefer to share some of your wealth now—and experience the joy of watching them benefit from it while you’re still alive?

For many families, this is one of the most meaningful conversations in the planning process. At the same time, gifting can also serve as a powerful strategy to reduce estate size and manage future tax exposure.

Gifting as an Estate Planning Strategy

For clients with sizable estates—particularly those approaching or exceeding federal or state estate tax exemption limits—gifting can be an effective way to reduce the overall value of the estate.

Key considerations include:

• The annual gift tax exclusion, which allows individuals to gift up to a set amount per recipient each year without using lifetime exemption

• Gifting assets during life to reduce estate size

• Coordinating gifts across spouses and family members

Because annual gifts do not count against lifetime gift and estate tax limits, they can be a strategic tool when used consistently over time.

The Emotional Side of Gifting

Beyond taxes, gifting is often about family, legacy, and connection.

Many clients prefer:

• Helping children with home purchases

• Funding education for grandchildren

• Supporting family businesses or career transitions

• Seeing the impact of their generosity firsthand

When structured properly, gifting can enhance both financial outcomes and family relationships.

Be Careful What You Gift

While gifting can be powerful, not all assets should be gifted, and doing so incorrectly can create unintended tax consequences.

When you gift an asset:

• The recipient inherits your cost basis

• Any built-in capital gains transfer with the asset

• Future taxes may be significantly higher for the beneficiary

This is especially important for:

• Real estate

• Investment securities

• Highly appreciated assets

Understanding Cost Basis and the Step-Up Rule

One of the most important estate planning concepts is the step-up in cost basis.

When assets are inherited at death:

• Beneficiaries typically receive a step-up in cost basis to the asset’s fair market value

• This often eliminates capital gains taxes if the asset is sold shortly thereafter

By contrast, when assets are gifted:

• The original cost basis carries over to the recipient

• Future capital gains taxes may be substantial

We frequently see individuals make costly mistakes by gifting assets as part of long-term care or estate planning—only to unintentionally shift a large tax burden to their children.

Alternatives to Outright Gifting

In many cases, there are more tax-efficient alternatives than outright gifting, including:

• Trust-based planning

• Gifting with a life estate (particularly for real estate)

• Retaining assets to preserve step-up benefits

• Coordinating gifting with broader estate and Medicaid planning

Choosing the right strategy depends on tax implications, asset types, long-term care planning, and family goals.

Contact Us . . . .

All of our services start with a complimentary consult. No high pressure sales tactics. We are financial planners, not salesmen.

About Our Firm:  Greenbush Financial Group is an independent registered investment advisory firm based in Albany, New York, that provides four main services to clients: fee-based financial planning services, investment management, employer-sponsored retirement plans, and retirement planning services.  The firm serves clients locally in the Albany region and virtually across the United States.

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