Gifting Ahead of the Sunset: Tax Advantages of Transferring Wealth to the Next Generation

Wealth transfer is always emotional—because it’s never just about money. It’s about legacy, opportunity, and setting your family up for long-term stability. But with the estate and gift tax exemptions set to “sunset” soon and potentially drop by half, many families are now asking a simple question with big implications:

Should we give gifts now, before the rules change?

The short answer: If you want to lock in today’s historically high exemption limits, it’s worth exploring your options now—not someday, not eventually, now.

At Aligned Wealth Advisors, we’ve guided families through multigenerational planning long enough to know this: smart wealth transfer isn’t about pressure or urgency—it’s about clarity, intention, and making choices that support what matters most to you and your heirs.
This article breaks down why gifting ahead of the sunset matters, the tax advantages at play, and practical strategies to help you move forward with confidence.

Start With the Big Picture

Before diving into tactics, step back. What’s your bigger goal?

• Reducing future estate taxes?
  
• Supporting children or grandchildren earlier in life?
  
• Passing on values, not just dollars?
  
• Protecting family harmony?

This isn’t a technical exercise—it’s a legacy decision. Starting with honest conversations ensures your plan aligns with both your financial strategy and your family priorities.

Why the “Sunset” Matters

Right now, the federal estate and gift tax exemption is at an all-time high. But it’s scheduled to shrink drastically when current tax laws expire.

If you don’t take advantage of the higher exemption before it sunsets, you could lose access to a significant tax-saving opportunity.
Meaning: delaying could lead to millions in future tax exposure for your heirs.



Gifting today lets you “lock in” the current rules—even after they change.

Strategic Ways to Gift Before the Sunset

1. Outright Gifts

The simplest method: transfer assets directly.

• Removes the gifted amount from your future taxable estate.
  
• Allows heirs to use or invest the funds sooner.
  
• Works well for liquid assets, cash, or marketable securities.

This approach is straightforward but should be paired with conversations around responsibility and long-term expectations.

2. Irrevocable Trusts

This is where gifting gets powerful.

By moving assets into a trust—before the exemption drops—you:

• Lock in today’s higher limits
  
• Shield the assets from estate taxes
  
• Protect the wealth from creditors, lawsuits, and even divorce
  
• Create long-term guardrails for how and when heirs receive funds

Trusts create structure, which is especially helpful when the goal is to preserve wealth across multiple generations.

3. Family LLCs or Partnerships

A Family LLC allows you to:

• Transfer ownership gradually
  
• Maintain control over investment decisions
  
• Potentially apply valuation discounts
  
• Simplify the gifting of business interests or real estate

This strategy works especially well for families with businesses, property portfolios, or complex assets.

4. Annual Exclusion Gifts

Even small, consistent transfers add up.

You can gift up to the annual exclusion amount per person each year without touching your lifetime exemption.
It’s a simple way to gradually reduce your taxable estate while helping your loved ones in real time.

5. Education & Healthcare Direct Payments

Direct payments for tuition or medical bills don’t count as gifts at all.

This is one of the most tax-efficient ways to support the next generation, especially for families helping with:

• Private school
  
• College or grad school
  
• Medical expenses
  

Long-term care

Keep the Big Picture in Focus

Gifting isn’t just a tax play. It’s a value decision.

• Some families gift early to help children buy a home or start a business.
  
• Others use trusts to instill discipline and protect against overspending.
  
• Some view gifting as a way to equalize opportunity across generations.

There’s no right answer—only the answer that aligns with your vision and comfort level.

And remember: wealth transfer doesn’t have to be equal to be fair. Fairness is about purpose, clarity, and shared expectations

Revisit the Plan Often

Tax laws shift. Family dynamics change. Priorities evolve.

Check in regularly to make sure your gifting strategy still fits:

• Does the trust structure still support your goals?
  
• Are the assets allocated in a tax-efficient way?
  
• Do you want to gift more—or slow down?
  
• Has your taxable estate grown faster than expected?



A strong gifting plan is dynamic, not fixed.

Final Thoughts

The sunset isn’t a reason to panic. It’s a reason to prepare.

Gifting ahead of the change lets you:

• Maximize current tax advantages
  
• Protect your legacy
  
• Provide opportunity when it matters
  
• Build a plan that supports future generations



If you want clarity on how much to gift, what to gift, and how to structure it, Aligned Wealth Advisors is here to help you make confident, well-informed decisions that protect both your wealth and your legacy.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).