Weekend Reading: 5 Tax-Efficient Wealth Transfer Strategies to Consider Before 2026
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
In our Retire With Purpose planning framework, tax planning is threaded throughout each of our four main pillars, one of which is estate planning.
READ THE ARTICLEIncreases and decreases: The reality is, future tax rates are expected to rise, and in addition, notable benefits under the Tax Cuts and Jobs Act are expected to decrease at the end of 2025. A constant that has remained within proposed tax bills from the Biden administration is that these changes will mostly impact the wealthy, so now is the time to consider if – and how – estate tax liability could impact your beneficiaries.
This article highlights several strategies to help keep your family’s future tax bill at a minimum, some of which include:
📌Annual and lifetime exclusion gifts – The annual gift exclusion for 2021 is $15,000 per beneficiary, or $30,000 for married couples. Any gift above this limit counts against the current lifetime exclusion of $11.7 million per recipient, which is expected to decline in 2026.
📌Trusts – Two trusts that can be utilized to gift assets include a funded crummy trust and an IRC Section 2503(c) trust. The Uniform Transfers to Minors Act (UTMA) also allows you to gift assets by having them transferred to a custodian for the benefit of the minor.
📌Education funding – Paying educational expenses for anyone is tax-free, as long as you pay the school directly. Additionally, you can contribute to a 529 Plan up to the annual gift tax exclusion tax-free.
📌Charitable donations – Another way to reduce your estate and sometimes, you tax bill in the current year, is by gifting cash or other assets to qualifying charitable organizations, some of which even accept stock or real estate.
Full-scope: There is one more thing you may want to consider that is often overlooked. Were you personally given money when you were young? If so, how did it impact you? Did it really help? If you weren’t, do you think you would be where you are today had you received some handouts?