Lifetime Gifting Strategies for Families With $10M+

How to move wealth during life without losing sight of control, basis, cash flow, and family dynamics.

June 13, 2026

For the last several years, most estate planning conversations were framed around a deadline. The higher federal estate and gift tax exemption created by the Tax Cuts and Jobs Act was scheduled to fall by roughly half at the end of 2025 unless Congress acted. Congress did act. The One Big Beautiful Bill Act, signed on July 4, 2025, increased the federal estate, gift, and generation-skipping transfer tax exemption to $15 million per person for 2026, with indexing beginning after 2026. For a married couple, that means a combined $30 million federal transfer tax shelter in 2026 if the plan is properly structured and the rules are followed.^[1]

That change matters. It removed the most urgent version of the "use it or lose it" conversation. But it did not make lifetime gifting irrelevant. A family with $10 million, $20 million, or $40 million still has to decide how much wealth should remain under the parents' direct control, how much should be used to prepare the next generation, and which assets are better transferred during life than at death. The federal estate tax may or may not be the main issue today. The planning question is broader than that.

I believe the right way to think about lifetime gifting is this: the gift itself is not the strategy. The strategy is deciding which future appreciation, family responsibility, income tax exposure, and estate liquidity risk should move off the donor's balance sheet while the donor is still alive. That is why gifting can be useful even after the exemption was increased. It is also why gifting can be harmful when it is done reflexively.

Figure 1 shows the basic 2026 transfer tax framework. The annual exclusion is useful, but it is a small gate. The lifetime exemption and GST exemption are the larger gates. Good planning is knowing which gate to use, and when not to use either.

Figure 1: 2026 Federal Gift, Estate, and GST Thresholds

The federal annual gift tax exclusion is $19,000 per recipient in 2026. A married couple can give $38,000 per recipient if both spouses use their annual exclusions, or if they elect gift splitting where required. The annual exclusion applies per donor, per donee, per year, which means the number of recipients matters. It is not a single family-wide limit.^[2]

The annual exclusion only works cleanly for gifts of present interests. The IRS instructions for Form 709 are direct on this point: future-interest gifts do not qualify for the annual exclusion and must be reported even if they are below the annual dollar amount.^[3] That is why trust drafting matters. A gift into a trust often needs withdrawal rights, commonly called Crummey powers, if the family wants the gift to qualify as a present-interest annual exclusion gift.

Above the annual exclusion, gifts are not automatically taxed. They are reported on Form 709 and generally reduce the donor's available lifetime gift and estate tax exemption. For 2026, that exemption is $15 million per person. The GST exemption is also $15 million per person.^[1] For families intending to benefit grandchildren or more remote descendants, the GST exemption can be just as important as the estate and gift tax exemption. Without it, transfers to "skip persons" can face an additional 40% transfer tax layer.

Several transfers are outside the normal gift tax lane. Tuition paid directly to a qualifying educational institution is not a taxable gift. Qualified medical expenses paid directly to the provider are also excluded. Gifts to a U.S. citizen spouse qualify for the marital deduction. Gifts to qualifying charities receive their own treatment. These exclusions are valuable because they do not consume the annual exclusion or the lifetime exemption when done correctly.^[4]

The basis rule is the first major catch. When a person receives property by lifetime gift, the recipient generally takes the donor's basis. The IRS gives a simple example: if the donor bought stock at $10 and gifts it when it is worth $100, the recipient's gain is measured from the donor's $10 basis when the stock is later sold.^[5] By contrast, property included in an estate often receives a step-up in basis at death under the estate tax basis rules. For a family that is not likely to owe estate tax, gifting low-basis public securities can trade a future estate tax that may never apply for a capital gains tax that almost certainly will.

That is the first principle. Do not ask, "How much can we give?" Ask, "Which asset is better owned by the next generation, a trust, or an entity from this point forward?"

Annual exclusion gifting is the easiest place to start because it can work without touching the lifetime exemption. A couple with three children, three sons- or daughters-in-law, and six grandchildren has twelve natural recipients. At $38,000 per recipient, that couple can move $456,000 in 2026 without using lifetime exemption. Over ten years, ignoring growth, that is $4.56 million moved out of the estate. If those gifts are invested and compound outside the parents' estate, the long-term effect is larger.

The benefit is simplicity. Annual gifts can help children build reserves, fund taxable investment accounts, pay insurance premiums inside an irrevocable life insurance trust, or begin conversations with the next generation about stewardship. The donor can also stop at any time. This is not the same level of commitment as moving millions of dollars into an irrevocable trust.

The trade-off is that annual exclusion gifts are slow relative to the size of a $10 million-plus estate. They also require discipline. If one spouse writes all the checks but the couple wants the gifts treated as coming one-half from each spouse, the gift-splitting rules may require Form 709 filings and spousal consent.^[3] If the gift goes to a trust, the trust needs to be drafted and administered so the annual exclusion actually applies. If the family forgets to send Crummey notices, ignores trust formalities, or treats the trust account like a family checking account, the tax theory and the paper trail can start to diverge.

Annual exclusion gifts are usually best for cash, high-basis assets, 529 contributions, and trust premium gifts. They are not automatically best for low-basis stock. If a parent owns a highly appreciated stock position and is well below the federal exemption, gifting that position outright to a child may simply move the parent's embedded gain to the child. That can be fine if the family has a reason for it, but it should be deliberate.

Education funding is one of the cleaner lifetime gifting opportunities because the tax code gives families more than one path. A grandparent can use the annual exclusion to fund a 529 plan, can front-load five years of annual exclusions into a 529 plan, or can pay tuition directly to a school. These are related strategies, but they are not the same.

For 529 plans, the five-year election is powerful. The IRS instructions for Form 709 allow a donor who contributes more than the annual exclusion to a qualified tuition program to elect to treat up to five times the annual exclusion as made ratably over five years.^[6] In 2026 numbers, that is $95,000 per donor per beneficiary, or $190,000 for a married couple if both spouses properly participate. A couple with six grandchildren could fund $1.14 million into 529 plans in one year and, if the election is handled correctly, avoid using lifetime exemption for that front-loaded amount.

The benefit is compounding. Money placed in a 529 plan when a grandchild is young has more time to grow tax-deferred and potentially come out tax-free for qualified education expenses. The donor also retains a meaningful degree of account control compared with an outright gift to a minor. The account owner can usually change beneficiaries within the family, subject to tax rules and plan limits.

The watch-outs are real. The 529 contribution does not qualify for the direct tuition exclusion. The Form 709 instructions specifically caution that qualified tuition program contributions do not qualify for the education exclusion.^[6] The five-year election also means the donor has used the annual exclusion for that beneficiary for that five-year period. Additional gifts to the same beneficiary during the window may use lifetime exemption. Overfunding is possible, investment options are limited to the plan menu, state tax rules vary, and nonqualified withdrawals can create income tax and penalties on earnings. For very high-net-worth families, 529 plans are often less about financial aid and more about efficient, values-based funding of education. That is a good use case, but it still needs tracking.

Direct tuition and medical payments are different. A grandparent can pay a grandchild's tuition directly to the school and not use annual exclusion or lifetime exemption. A parent can pay a child's medical bill directly to the hospital or provider with the same gift tax result. The key word is directly. Reimbursing the child after the fact, or giving cash to the child so the child can pay the bill, is generally just a regular gift.

Outright gifts are rarely the first choice for families with significant wealth. They are simple, but they give the recipient full control. A 25-year-old who receives $2 million outright has a very different planning life than a 25-year-old who is a beneficiary of a properly drafted trust. The tax result may be similar at the start. The family result is not.

Irrevocable trusts are the main vehicle for larger lifetime gifts because they can separate beneficial use from outright control. A trust can define when distributions may be made, who makes those decisions, whether assets are protected from a beneficiary's creditors or divorce, and whether the assets continue for grandchildren. A dynasty trust adds a GST layer, allocating GST exemption so the trust can potentially benefit multiple generations without estate tax being imposed at each generation.

A spousal lifetime access trust, or SLAT, is one of the more common trust strategies for married couples. One spouse gifts assets to an irrevocable trust for the benefit of the other spouse and, usually, descendants. If designed correctly, the gifted assets and their future appreciation are outside the donor spouse's estate. The beneficiary spouse can still receive distributions under the trust terms, which gives the couple a form of indirect access.

That last sentence is the reason SLATs are attractive and also the reason they require care. The access is not the same as ownership. If the spouses divorce, if the beneficiary spouse dies first, or if the trust is drafted too loosely, the planning can become much less comfortable. Couples who each create SLATs for the other also need to avoid making the trusts look like mirror images of each other. The reciprocal trust doctrine is a real concern, and this is attorney territory, not template territory.

Figure 2 illustrates the core economic reason larger trust gifts can work. A $5 million gift growing at 7% for 20 years becomes roughly $19.35 million. The original gift uses $5 million of exemption, but the $14.35 million of growth happens outside the estate. If the family is otherwise exposed to a 40% estate tax, the tax avoided on that shifted appreciation is about $5.74 million before considering state estate tax.

The benefit is not just tax. A trust can keep assets out of a beneficiary's hands until the beneficiary is ready. It can protect assets from a failed marriage. It can name a professional trustee or directed trustee structure. It can preserve family capital for education, housing, business opportunities, health needs, or philanthropy.

The costs are flexibility and basis. A completed gift to an irrevocable trust is not a casual transfer. The donor should not expect to take the asset back. The trust may be a grantor trust for income tax purposes, which means the donor continues paying income taxes on trust income. That can be a feature because the donor's tax payments allow the trust to grow without being reduced by its own income taxes. It can also become a cash-flow burden. And unless the trust is designed to cause estate inclusion or allows later basis planning through substitution powers, the gifted asset typically will not receive a step-up in basis at the donor's death.

That is why I am cautious with families around the $10 million to $20 million range. If the assets are mostly low-basis marketable securities, and the family is not likely to owe federal or state estate tax, aggressive lifetime gifting may be solving the wrong problem. If the assets are a concentrated business, private real estate, or another high-growth asset that could push the family above the exemption, the answer can change quickly.

Figure 2: Why High-Growth Assets Are Often the Best Lifetime Gifts

For ultra-high-net-worth families, the most powerful gifts are often not cash. They are interests in a closely held business, family limited partnership, family LLC, real estate entity, or pre-liquidity company. The reason is simple: the gift tax value is measured when the gift is made, while the future appreciation after the gift occurs outside the donor's estate.

Kitces.com published a particularly useful 2026 discussion of this point for business owners. The core idea is that gifting shares in a business can be especially effective before a dramatic increase in value or before a sale at a premium, because the gift and estate tax exemption applies to the value of the shares at the time of the gift. Future appreciation then belongs to the trust or recipient, not the donor's estate.^[7]

Valuation discounts can add another layer. A non-voting minority interest in a closely held company is not worth the same amount to a hypothetical buyer as a controlling, liquid interest. Discounts for lack of control and lack of marketability can reduce the gift tax value. The IRS Form 709 instructions require disclosure when a reported gift uses discounts for lack of marketability, minority interest, fractional interests, or similar reasons, including an explanation of the basis for the claimed discounts.^[3] This is not an area for rough estimates. A qualified valuation is part of the strategy.

Figure 3 uses a simplified version of the Kitces business-owner fact pattern. Assume a $60 million business, a 25% non-voting interest, and a 20% combined valuation discount. Without the discount, the gift value is $15 million. With the discount, the gift value is $12 million. If the business is later sold for $80 million, the trust's 25% interest receives $20 million. The $8 million spread between the $12 million gift value and the $20 million sale proceeds has shifted outside the estate. At a 40% estate tax rate, that spread represents $3.2 million of potential estate tax avoided.

The upside is obvious. The watch-out is timing. If the gift is made after a letter of intent is signed, after negotiations are far along, or after a sale is effectively baked in, the IRS may argue that the value was higher or that the income was already assigned. Kitces makes this point plainly: the strongest fact pattern is a gift completed before the business is taken to market and certainly before a letter of intent is signed.^[7]

There is also a human side. A founder may be comfortable giving away non-voting economics but not voting control. A child may work in the business while another child does not. A private equity sale may include earnouts or rolled equity. A family LLC may be tax-efficient but create conflict if distributions are uneven or governance is unclear. The tax savings can be meaningful, but the entity documents, buy-sell provisions, trustee selection, and family communication have to carry their weight.

Figure 3: Business Interest Gift Before a Later Premium Sale

A grantor retained annuity trust, or GRAT, is a more technical way to transfer upside. The donor contributes assets to a trust and retains a right to receive fixed annuity payments for a term of years. Under Internal Revenue Code Section 2702, certain retained interests are valued under Section 7520.^[8] The Section 7520 rate is published monthly by the IRS and is 5.0% for June 2026.^[9] If the trust assets outperform the IRS hurdle rate over the GRAT term, the excess can pass to the remainder beneficiaries with little or no taxable gift, depending on the design.

The benefit of a GRAT is that it can be efficient when the donor has a volatile or high-upside asset and does not want to use much lifetime exemption. If the asset underperforms, the annuity payments usually pull the asset value back to the donor and the strategy largely fails without much transfer tax damage. That makes GRATs more forgiving than a large completed gift.

The drawbacks are mortality risk, interest-rate sensitivity, and administration. If the donor dies during the GRAT term, some or all of the trust assets may be pulled back into the donor's estate. If the asset does not beat the Section 7520 hurdle, there may be little or nothing left for the beneficiaries. GRATs are also not usually the cleanest GST planning tool because of the estate tax inclusion period rules. For families trying to benefit grandchildren, dynasty trusts and other structures may be better suited.

An intentionally defective grantor trust, or IDGT, installment sale is another common ultra-high-net-worth strategy. In a typical structure, the donor makes a seed gift to a grantor trust and then sells an appreciating asset to that trust in exchange for a promissory note. The note carries interest at the appropriate Applicable Federal Rate, which the IRS publishes monthly.^[10] If the asset grows faster than the note interest, the excess growth accrues for the trust beneficiaries. Because the trust is designed as a grantor trust, the sale is often structured to be ignored for federal income tax purposes between the grantor and the trust.

The benefit is leverage. The donor may transfer a large asset without using exemption for the full value, while retaining a note that can provide cash flow. The trade-off is that the sale must be respected as a real sale. The note needs real terms, payments, economic substance, and sufficient trust capital. The asset needs a defensible valuation. The family needs to understand that a note coming back to the donor is still an asset of the donor's estate unless it is paid down, gifted, or otherwise planned around.

Intra-family loans are the simpler cousin. A parent can lend money to a child or to a trust at the appropriate AFR. If the child uses the funds to buy a home, start a business, or invest, the economic benefit is the spread between what the borrowed money earns or saves and the AFR interest cost. The catch is the same: document the loan, charge the proper rate, require payments, and avoid treating the loan like a gift with a pretend note attached. Below-market loans are governed by Internal Revenue Code Section 7872, which can treat forgone interest as transferred from the lender to the borrower and retransferred as interest.^[11]

Life insurance is not always a gifting strategy, but irrevocable life insurance trusts often rely on gifting. The family creates an ILIT, the trust owns the policy, and the donor makes annual gifts to the trust so the trustee can pay premiums. If the trust is drafted and administered properly, the death benefit can be outside the insured's taxable estate and can pass to beneficiaries under the trust terms.^[13]

This is most useful when the family has a potential estate tax bill, a closely held business that needs liquidity, unequal assets among children, or a desire to replace wealth that is being given to charity. It can also be paired with other strategies. For example, annual exclusion gifts to an ILIT may fund premiums while larger exemption gifts move appreciating assets to a dynasty trust.

The watch-outs are formal. If an existing policy is transferred to an ILIT and the insured dies within three years, the policy can still be included in the insured's estate under the three-year rule. A new policy purchased directly by the ILIT is often cleaner. Crummey notices need to be sent and documented when the family is relying on annual exclusion gifts. The trustee needs to act as trustee, not as a rubber stamp. Insurance illustrations also need stress testing. A policy that only works under optimistic crediting assumptions is not a plan; it is a hope.

The first mistake is giving away assets the donor may need. A tax-efficient transfer is not successful if it leaves the parents dependent on children, forced to sell illiquid assets, or unable to maintain the lifestyle they planned for. Before a large gift, we model the donor's balance sheet after the gift under conservative return, spending, tax, and health care assumptions. The family should know what the plan looks like if markets disappoint.

The second mistake is ignoring basis. Families often focus on estate tax because 40% is a large number. But capital gains tax is also real, and carryover basis can be costly. For families under the federal exemption, retaining low-basis assets until death can be better than gifting them. For families above the exemption, the comparison becomes more nuanced: is it better to avoid a 40% estate tax on future appreciation, or preserve a basis step-up? The answer depends on growth rate, holding period, state tax, charitable intent, and the probability the family will remain taxable.

The third mistake is waiting too long on business gifts. Once a sale process is underway, the planning window narrows. The strongest business-gifting strategy is often designed twelve to eighteen months before a likely sale process, not the week before a letter of intent. If the family owns a business or concentrated real estate entity, the planning should begin before there is a buyer in the data room.

The fourth mistake is treating the gift tax return as a formality. Form 709 is the paper trail for the entire strategy. It reports gifts, elects gift splitting, allocates GST exemption, discloses valuation discounts, and starts the statute of limitations when adequate disclosure is made.^[12] A weak filing can leave a strong strategy exposed.

The fifth mistake is forgetting family governance. A trust can move assets, but it cannot by itself teach judgment. Families that give well usually pair the technical work with conversations about why the gift is being made, what the assets are for, who has authority, how distributions will be requested, and how conflict will be handled. The bigger the gift, the more important that conversation becomes.

For a married couple with $10 million to $15 million and mostly marketable securities, I would usually start with annual exclusion gifts, 529 funding, direct tuition or medical payments where relevant, and careful beneficiary and estate document review. I would be cautious about large low-basis gifts unless there is a clear non-tax reason.

For a family with $20 million to $35 million, I would model the estate tax exposure under multiple growth rates. The current exemption may cover the estate today, but ten years of growth can change the picture. This is where SLATs, dynasty trusts, annual exclusion trusts, and selective gifts of high-growth assets often become worth discussing.

For a business owner, real estate family, or founder with $10 million-plus today and a plausible path to a much larger value, I would start earlier. The planning value often comes from acting before the value is obvious to everyone else. Non-voting shares, trust ownership, valuation discounts, and pre-sale timing can matter more than the headline exemption amount.

For a family already above the $30 million married-couple exemption, the conversation is broader. Annual exclusion gifts are still useful, but they are not enough by themselves. Larger exemption gifts, GRATs, IDGT sales, dynasty trusts, ILITs, charitable planning, and state estate tax planning should be evaluated together. At that level, the question is not whether a tool works in isolation. The question is how the tools interact across tax, liquidity, investment risk, and family control.

Lifetime gifting is not about giving away as much as possible as quickly as possible. It is about moving the right assets, at the right time, to the right structure, for the right reason. The current 2026 exemption gives families more room to be patient, but patience should not become inaction when an asset is likely to grow, when a sale may be coming, or when the next generation needs to be prepared.

For families with $10 million or more, the best gifting plans are built with three lenses at once: tax math, family readiness, and donor security. If any one of those is missing, the plan is incomplete.

This piece is educational and should be coordinated with your estate attorney and CPA before taking action. Our team can help model the trade-offs, compare structures, and coordinate the moving pieces so the gift supports the broader plan.

All my best,

Brandon VanLandingham, CFA, CMT, CFP

Founder / CIO

Other Articles You May Be Interested In:

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The Better Way to Give From an IRA

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1. Internal Revenue Service, Rev. Proc. 2025-32, "2026 Adjusted Items." The revenue procedure states that Section 70106 of the One Big Beautiful Bill Act increased the basic exclusion amount to $15,000,000 for calendar year 2026, and that the GST exemption amount under Section 2631(c) is also $15,000,000 for 2026. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

2. Internal Revenue Service, Rev. Proc. 2025-32, Section 4.42, "Annual Exclusion for Gifts." For 2026, the first $19,000 of gifts to any person, other than gifts of future interests, is not included in taxable gifts. The 2026 noncitizen spouse annual exclusion amount is $194,000. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

3. Internal Revenue Service, Instructions for Form 709 (2025). The instructions discuss future-interest gifts, gift splitting, 529 five-year elections, valuation discount disclosure, and Schedule A reporting. https://www.irs.gov/instructions/i709

4. Internal Revenue Service, "Frequently Asked Questions on Gift Taxes." The IRS lists common nontaxable gifts, including gifts within the annual exclusion, tuition or medical expenses paid for someone, gifts to a spouse, and gifts to political organizations; charitable gifts are separately deductible from the value of gifts made. https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

5. Internal Revenue Service, "Frequently Asked Questions on Gift Taxes," basis discussion under "What if I sell property that has been given to me?" https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

6. Internal Revenue Service, Instructions for Form 709 (2025), Schedule A, Line B, "Qualified Tuition Programs (529 Plans or Programs)." The instructions describe the five-year election and caution that QTP contributions do not qualify for the education exclusion. https://www.irs.gov/instructions/i709

7. Anna K. Pfaehler, "Gifting Strategies That Allow Business-Owner Clients To Save (Millions Of) Dollars In Estate And Income Taxes," Kitces.com, March 25, 2026. https://www.kitces.com/blog/anna-pfaehler-estate-planning-business-owners-gifting-valuation-discount-taxes-shares/

8. 26 U.S.C. Section 2702, "Special valuation rules in case of transfers of interests in trusts." The statute provides that certain qualified retained interests are valued under Section 7520. https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title26-section2702

9. Internal Revenue Service, "Section 7520 interest rates." The IRS states that the June 2026 Section 7520 rate is 5.0%. https://www.irs.gov/businesses/small-businesses-self-employed/section-7520-interest-rates

10. Internal Revenue Service, "Applicable federal rates (AFRs) rulings." The IRS publishes prescribed rates monthly for federal income tax purposes. https://www.irs.gov/applicable-federal-rates

11. 26 U.S.C. Section 7872, "Treatment of loans with below-market interest rates." https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title26-section7872

12. Internal Revenue Service, "About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return." Form 709 is used to report transfers subject to federal gift and certain GST taxes and allocations of lifetime GST exemption. https://www.irs.gov/forms-pubs/about-form-709

13. 26 U.S.C. Section 2042, "Proceeds of life insurance," and 26 U.S.C. Section 2036, "Transfers with retained life estate." https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title26-section2042 and https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title26-section2036

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