As we approach year-end, it is an ideal time to review your financial, tax, estate, and philanthropic planning strategies to ensure they remain aligned with your family’s objectives. Thoughtful planning can help support loved ones, advance charitable priorities, manage taxes effectively, and prepare younger generations for the responsibilities that accompany wealth.

Wealth Transfer and Gifting Strategies

In 2026, the federal lifetime gift and estate tax exemption is $15 million per person, while the annual gift tax exclusion is $19,000 per recipient. The One Big Beautiful Bill (OBBB) Act permanently increased the federal lifetime exemption, which will continue to be indexed annually for inflation, as will the annual exclusion amount. Although future tax legislation could modify the current lifetime exemption amount, wealthy individuals are no longer facing the prospect of an imminent reduction, allowing them to approach gifting and estate planning with greater certainty.

Tax-Free Transfer Strategies

As year-end approaches and families begin gathering for the holiday season, annual exclusion gifts can be an effective way to support loved ones, advance family goals, and gradually reduce the size of your taxable estate without using any of your lifetime exemption. These gifts may be made outright to individuals or contributed to qualifying trusts. Gifts to minors may be made to custodial accounts or directed to a Trump Account, subject to applicable contribution limits. Families focused on education may wish to consider funding college savings plans, including the ability to “superfund” five years of annual exclusion gifts in a single year.

Beyond annual exclusion gifting, direct payment of qualified tuition and medical expenses can provide another tax-efficient way to support loved ones. Payments made directly to an educational institution or healthcare provider are not considered taxable gifts and do not use either annual exclusion amounts or lifetime exemption.

Lifetime Transfer Strategies

With concerns about an imminent reduction in the lifetime exemption behind us, families can evaluate lifetime gifting based on its broader planning benefits rather than legislative deadlines. Among those benefits is the ability to remove transferred assets and future appreciation from your taxable estate while providing support when it can be most meaningful, whether helping a child purchase a home, launch a business, or pursue other important opportunities.

When utilizing lifetime exemption, careful asset selection can significantly enhance the value of a transfer. Assets with substantial growth potential are particularly attractive, as all future appreciation can grow outside of your taxable estate. In addition, interests in closely held businesses, family investment entities, and certain real estate holdings may qualify for valuation discounts, allowing you to transfer greater economic value while consuming less exemption.

Advanced Transfer Strategies

Families may also wish to explore planning techniques designed to transfer future appreciation with little or no use of lifetime exemption. Strategies such as grantor retained annuity trusts (GRATs), sales to grantor trusts, intra-family loans, and charitable lead trusts can transfer appreciation in excess of a prescribed interest rate to younger generations with minimal transfer tax consequences, making them an effective complement to a broader wealth transfer strategy.

If interest rates continue to rise, Qualified Personal Residence Trusts (QPRTs) may become increasingly attractive. A QPRT allows a homeowner to transfer a primary or secondary residence to future beneficiaries while retaining the right to occupy the property for a specified term. Because the taxable gift associated with a QPRT is generally lower when the applicable interest rate is higher, this strategy may be more tax efficient in a higher interest rate environment. As with any advanced planning technique, both the tax and practical implications should be carefully evaluated.

Charitable Planning and Family Engagement

Year-end is when many families revisit their philanthropic priorities. Beyond supporting meaningful causes, charitable planning strategies can generate significant income and estate tax benefits while creating opportunities to engage multiple generations around shared values and purpose.

Structuring Charitable Gifts

For clients who typically itemize deductions, accelerating charitable contributions before year-end may help maximize current tax benefits. Families should evaluate whether gifts are best made directly to charity, through a donor-advised fund or private foundation, or a combination of charitable vehicles based on their philanthropic goals and desired level of involvement.

Families holding concentrated stock positions, highly appreciated investments, or closely held business interests should consider donating appreciated assets rather than cash. Such gifts can potentially avoid capital gains tax while generating a charitable deduction to offset other income.

Those seeking to balance charitable and family objectives may wish to explore split-interest trusts, such as charitable remainder trusts or charitable lead trusts, which can integrate philanthropic, tax, and wealth transfer goals within a single strategy.

Beginning in 2026, charitable deductions are subject to a new adjusted gross income (AGI) floor, and the value of itemized deductions for taxpayers in the highest federal tax bracket is limited. As a result, careful planning around the timing and structure of charitable gifts is increasingly important to maximize available tax benefits. Donors planning multi-year charitable commitments may benefit from “bunching” gifts into a single tax year and should consult their tax advisors before making significant contributions.

Philanthropy as a Family Engagement Tool

Philanthropy can serve as a powerful platform for family engagement. Year-end often provides a natural opportunity to involve children and grandchildren in charitable discussions, grantmaking decisions, and conversations about family values. These experiences can help strengthen family connections, encourage financial and philanthropic stewardship, and establish a framework for multi-generational giving.

By involving younger generations in giving decisions, families can help them develop the judgment, empathy, and leadership skills needed to become thoughtful stewards of wealth. These shared experiences often strengthen family bonds while deepening understanding of the values and priorities that guide family decision-making.

Income Tax Planning Opportunities

Several year-end income tax planning opportunities may warrant review before December 31. These include harvesting investment losses to offset realized capital gains, rebalancing concentrated positions, reviewing projected income, and evaluating Roth conversion opportunities. Individuals should also confirm that any required minimum distributions (RMDs) have been satisfied and consider whether qualified charitable distributions (QCDs), where applicable, may align with their charitable and tax planning objectives.

Given the evolving tax landscape, year-end tax projections can help identify opportunities to improve after-tax outcomes, manage future liabilities, and avoid surprises at filing time.

Looking Ahead

Year-end planning is most effective when viewed as part of a broader wealth strategy rather than a series of isolated transactions. By coordinating tax and estate planning, philanthropy, and family engagement efforts, families can better align their wealth with their values, support the people and causes they care about most, and create a foundation for responsible stewardship and informed decision-making.

We encourage you to connect with your SCS advisory team before year-end to discuss planning opportunities that may be appropriate given your family’s specific goals, assets, and circumstances.

Wishing you and your loved ones a happy and healthy holiday season!