Advanced Gifting Strategies: Leveraging Lifetime Exemptions Wisely
In today’s wealth transfer landscape, timing and structure are everything. The federal lifetime gift and estate tax exemption gives high-net-worth families a powerful way to move wealth efficiently…but that opportunity may soon narrow.
As of 2025, the federal lifetime exemption stands at $13.61 million per individual (or $27.22 million per married couple). Yet under current law, this historically high limit will drop roughly in half on January 1, 2026, when provisions of the Tax Cuts and Jobs Act (TCJA) expire.
For affluent families, this creates a “use it or lose it” moment…a window to lock in today’s higher exemption before it sunsets.
Understanding the Lifetime Exemption
The lifetime exemption allows individuals to transfer a set amount of wealth during life or at death without incurring federal gift or estate taxes. When combined with annual exclusion gifts and advanced trust structures, it can dramatically reduce future estate exposure.
Strategic Gifting Approaches for High-Net-Worth Families
1. Use the Exemption Before It Shrinks
Consider making large gifts now—transferring appreciating assets or ownership interests while the exemption remains high.
For example, a $10 million gift made in 2025 won’t be “clawed back” when the exemption drops in 2026. You’ve locked in that full $10 million benefit permanently.
Ideal assets to gift:
Interests in privately held businesses
Appreciating real estate
Private equity positions
Marketable securities with long-term upside
2. Combine Annual Exclusions with Lifetime Gifting
In addition to the lifetime exemption, you can gift $18,000 per recipient annually ($36,000 per couple, 2024 limits) without touching your exemption.
Used consistently, this builds significant intergenerational transfers over time—especially when layered alongside larger strategic gifts.
3. Leverage Valuation Discounts via FLPs or LLCs
Transferring minority or non-controlling interests in family limited partnerships (FLPs) or LLCs can qualify for valuation discounts of 20–40%.
That means you can move more economic value while consuming less of your exemption which is an efficient way to compress estate value legally.
4. Intentionally Defective Grantor Trusts (IDGTs)
An IDGT is a sophisticated estate-freeze tool that lets you transfer appreciating assets into a trust for heirs while paying the income tax personally.
The result? The asset’s growth occurs outside your taxable estate, while your tax payments further reduce the estate indirectly…without triggering gift tax.
5. Spousal Lifetime Access Trust (SLAT)
If you’re hesitant to part with control or access, a SLAT allows one spouse to gift assets to a trust benefiting the other spouse (and descendants).
You remove assets from your estate but maintain indirect access through your partner which is ideal for couples seeking balance between liquidity and tax strategy.
Tip: Avoid “reciprocal trust” issues if both spouses establish SLATs…each must differ meaningfully in structure and timing.
6. Generation-Skipping Transfer (GST) Planning
Pairing your lifetime exemption with your GST exemption enables dynasty trusts that skip multiple generations of estate taxation and grow tax-free for descendants. This is long-term legacy planning at its finest.
7. Combine with Charitable Structures
Strategic philanthropy amplifies both impact and efficiency. Vehicles like:
Charitable Lead Annuity Trusts (CLATs)
Charitable Remainder Trusts (CRTs)
allow you to support causes you care about and pass remaining assets to heirs at a reduced tax cost.
Coordinating with the 2026 Sunset
Before 2026:
Evaluate large gifts or trust funding now to secure the full exemption.
Prioritize high-growth assets for maximum long-term benefit.
After 2026:
Continue annual exclusion gifting.
Reassess estate structures to reflect the smaller exemption.
Consider state-level estate taxes, which may become more significant.
Example Strategy: 2025 Action Plan for a High-Net-Worth Couple
Gift $10M in appreciating assets into a SLAT or IDGT.
Use FLP structure for a 30% valuation discount → effectively transferring $14M of value using $10M of exemption.
Continue annual $36,000 per donee gifts.
Allocate GST exemption for dynasty trust benefits.
File detailed gift tax returns to document valuations and exemption use.
Outcome:
Future appreciation escapes estate taxation—and the couple secures today’s higher exemption before it disappears.
The Takeaway
The years leading up to 2026 present a rare window for strategic gifting. With thoughtful design and coordination, high-net-worth families can lock in significant tax advantages, protect family wealth, and build a lasting legacy.
At Christie Cox, we help clients design custom gifting and trust strategies that align with their long-term family and estate goals, balancing tax efficiency, asset control, and generational impact.