Closing Out 2025: Strategies for Gifting, Giving, and Family Engagement

As 2025 draws to a close, the season brings not only holiday celebrations and family gatherings, but also valuable opportunities to maximize your estate and charitable planning before the ball drops. In this insight, we break down the top strategies to consider before December 31, including gifting to loved ones, charitable planning, and the importance of communicating the why behind your estate plan with your family.

Year-End Gifting

Many clients make gifts to loved ones at year-end, whether it be for the holidays or just a time to tie up loose planning ends. Each U.S. citizen has an exemption they can use to shelter taxable gifts from the federal gift tax (a flat 40% tax which applies to certain transfers made during lifetime) or estate tax (a flat 40% tax which applies to certain transfers made at death). This lifetime exemption amount is $13.99 million per person in 2025 and will increase to $15 million per person on January 1, 2026. Married couples may choose to combine their exemptions for gifting purposes, allowing them to transfer a total of $27.98 million this year (reduced by any previous taxable gifts). Thanks to recent tax legislation (the One Big Beautiful Bill Act passed in July), this exemption amount is now permanent and will continue to be adjusted for inflation each year, barring any future legislative changes.

Strategic gifting now can reap substantial estate tax savings in the future. Lifetime gifts are beneficial from a tax standpoint because all future appreciation on the gifted asset(s) is removed from your estate. Coupled with a thoughtful investment approach, lifetime gifting can result in a larger share of your estate going to the people and causes important to you, rather than to pay taxes. Furthermore, making gifts during your lifetime allows beneficiaries to have access to funds and gives you the opportunity to see your loved ones benefit in real time.

Certain transfers are not taxable; therefore, they will not use any of your exemption, including transfers between spouses, gifts made to qualifying charities and annual exclusion gifts. The annual exclusion is the amount that can be gifted once per year per recipient without using your gift/estate tax exemption. In 2025, the annual exclusion amount is $19,000. This means that you can give $19,000 (or $38,000 for a married couple) to as many family members or friends as you choose without using any of your $13.99 million gift/estate tax exemption. Annual exclusion gifts may be made outright, to certain types of trusts, or to college savings plans. An added bonus for gifts to college savings plans: these may be “super-funded” with 5 years’ worth of annual exclusion gifts at once (so $95,000 or $190,000 for a married couple in 2025). This ability to super-fund, combined with the income tax advantages of these plans, can have a powerful effect over time.

Gifts come in all shapes and sizes, and the best technique depends on your goals and the needs of the recipient. Key considerations when making a gift include what to give (cash, securities or complex assets such as real estate or an interest in a family limited partnership or privately held business) and how to give it (outright or in trust). Your SCS advisors can help you explore the best strategy to achieve your goals and minimize tax exposure now and in the future.

Charitable Planning

In addition to making gifts to loved ones, the end of the year is a popular time for clients to benefit charitable causes near and dear to them. Charitable gifts take many forms, including gifts of cash, appreciated securities, or complex assets. Gifts may be made directly to a charity or to an entity such as a donor-advised fund, private foundation, or charitable trust.

For those subject to required minimum distributions (RMDs) from a retirement plan, a qualified charitable distribution (QCD) may be a good option to satisfy charitable goals while reducing taxable income for this year. RMDs are taxed as ordinary income and may push certain taxpayers into a higher bracket for a particular year. However, individual retirement account (IRA) owners who are at least 70½ years of age may choose to contribute up to $108,000 from their IRA directly to a qualifying public charity (note: this does not include donor-advised funds). As a result, their RMD—and taxable income—will be reduced by the amount of the QCD.

Working with your advisors to plan charitable giving is crucial in order to maximize your impact and minimize your tax bill. Beginning in 2026, new rules regarding deductions for charitable contributions will go into effect so be sure to begin working with your advisors early to develop your giving plan and determine whether any gifts should be accelerated in 2025 or if a bunching strategy should be utilized in future years.

It is also important to think through your long-term charitable mission and how you might engage the next generation in that planning. Philanthropy can be a great way to introduce children and grandchildren to your family values and begin to provide them with education on topics such as spending, saving and investing.

Family Communication

While it takes a lot of time and effort to develop a gifting strategy and put the right legal documentation in place, the real hard work often begins after the ink has dried. Developing a plan to prepare your heirs to receive assets—whether outright or as a beneficiary of a trust—is a key component to a successful estate plan. Poor communication often leads to family members making assumptions or feeling as though they are not trusted. Children who receive assets in trust may assume mom and dad did not leave them their inheritance outright because they think they are irresponsible. If the bulk of the estate goes to charity, family members may feel slighted. Relationships among siblings who are treated differently for valid reasons may become strained. While not all family dynamics can be managed by communication alone, a customized approach for your family based on the planning you’ve done goes a long way in preparing loved ones to manage family wealth.

For multigenerational planning, it is important to share not only the details of what has been planned (in an age-appropriate way and on a timeline that feels right to you), but also why you made those choices. Taking time to reflect on the values and goals that shaped your plans helps ensure those intentions are carried forward.

A powerful way to memorialize your thinking is by writing a letter of intent to the trustees of irrevocable trusts you have created. This letter offers guidance to your trustees, as well as your children, grandchildren, and future generations. More importantly, it gives you the opportunity to articulate the values behind your planning decisions and the impact you hope your legacy will have.

This work doesn’t have to be overwhelming. It is a process that unfolds over time and can be broken down into manageable steps. You do not need to have all the answers to begin, just a willingness to reflect and engage.

If you’re interested in learning more about how we help families uncover and express the values behind their plans—and create thoughtful strategies to engage younger generations—please reach out to us. We’d love to support you in this important work.

Wishing you and your family a joyful and healthy holiday season.