The mechanics of this can be complicated. For high-net-worth families, gifting also should focus on instilling values. We discuss with Dean Williams, partner and senior financial advisor at WealthCrossing, based in Richmond, Va., about how families can do this.
Larry Light: You say gifting isn’t just a tax strategy. It’s also a teaching tool, to instill values in your beneficiaries. Tell us more about that.
Dean Williams: When you’ve built significant wealth, it’s natural to ask, What now? At some point, the focus shifts from accumulating assets to using them in a way that reflects your values. Lifetime gifting becomes more than a financial move. It’s a way to prepare the next generation, to foster responsibility and pass down wisdom alongside wealth. The goal isn’t just to minimize taxes, but to instill stewardship and purpose in your beneficiaries.
Light: What’s the benefit of annual gifting?
Williams: The Internal Revenue Service allows individuals to gift up to $19,000 per recipient in 2025. For couples, that’s $38,000, and doesn’t affect using any tax exemptions. For families with multiple children or grandchildren, that can quickly add up.
Annual gifts can fund education, plus help with a home purchase or support savings goals. But beyond the numbers, consistent gifting sets expectations and opens conversations about values, budgeting and philanthropy. It creates opportunities to educate recipients about handling money responsibly to encourage building financial literacy over time.
Light: There is an annual limit on how much you can give without your recipient paying taxes. And a limit also exists on the amount of your estate, which is the sum of your assets at the time of your death, that you can pass along tax-free. These limits are the same amount for both types of transfers. What about larger gifts that exceed the limits?
Williams: Those can apply against your lifetime gift and estate tax exemption, which remains historically high. The Tax Cuts and Jobs Act (TCJA) temporarily doubled the exemption, now $13.99 million per person in 2025.
It was set to revert to roughly half that amount in 2026, but the One Big Beautiful Bill Act preserves and even increases it to $15 million per person, or $30 million for married couples, with future adjustments for inflation. This gives your family more flexibility to make impactful transfers during their lifetimes and minimize any taxes on your estate, minimizing estate tax exposure.
Light: Are there any tax pitfalls families should watch out for?
Williams: Yes, especially with appreciated assets. If you gift something like stock, the recipient inherits your original cost basis, which is what you paid for the shares way back when you bought them. That means, when your beneficiary eventually sells the stock, he or she could owe capital gains taxes on the full growth when they sell. In some cases, it may make more sense to hold onto appreciated assets and pass them to the beneficiary through your estate, which can provide a step-up in basis—which re-sets the cost basis to the time of your death. It depends on your family’s tax situation and goals.
Light: Another way of transferring wealth is through a trust, which is a fund set up to hold assets. One advantage: They aren’t usually considered part of an estate. How can trusts help in managing gifts more strategically?
Williams: Trusts are one of the most powerful tools for structured gifting. For instance, an irrevocable trust can remove assets (and future growth on those assets) from your taxable estate. Additionally, they can be structured to take advantage of the annual exclusion allowance.
Another type, a grantor trust, allows you, as the grantor, to pay income taxes on behalf of the trust, essentially making an additional, tax-free gift that preserves more value for beneficiaries. A third variety, a dynasty trust, can span multiple generations, maintaining family wealth long-term while protecting assets from creditors or divorce.
The key is designing a trust structure that aligns with your intentions and goals, whether that’s asset protection, tax efficiency or guiding how and when wealth is accessed to align with your family’s values.
Light: For families looking to start their estate planning, what’s the best first step?
Williams: Start with your “why.” Define what you want your wealth to accomplish, that might be education, entrepreneurship, charitable giving or family security. From there, build a structure that reflects those priorities. Even simple steps like annual gifting or funding 529 education accounts can set the stage for broader conversations about legacy. And remember, gifting doesn’t have to be limited to money. Transferring family stories, experiences and guidance is equally powerful.
Light: What about communication? Many families struggle with that piece.
Williams: That’s often the most overlooked element. Wealth transfer plans work best when there’s clarity and communication. Surprises, especially around inheritances or trust terms, can create tension. Discussing intentions early can help your heirs to understand both the financial and emotional reasons behind your strategy. It also gives them a chance to learn, ask questions and develop their own sense of responsibility.
Light: Any final advice for those preparing to gift during their lifetime?
Williams: Think of gifting as a process, not an event. The best strategies are tailored, flexible and aligned with your family’s values. Tax laws will continue to evolve, but your values provide the real foundation for decision-making. When done thoughtfully, lifetime gifting is about more than numbers, it’s a chance to shape how your family relates to wealth for generations to come.