The answer isn’t simple, especially when there are tax implications and family relationships at stake. After you’ve spent a lifetime building wealth, an estate worth over $2+ million is a major milestone and worth the energy to make careful decisions about how to leave that legacy to your family. You may wonder if you should gift assets to your children now or hold them in your estate to transfer when you die.
If you’re trying to make that decision as you create your estate plan or are thinking of changing your existing plan, it’s important to talk to our experienced estate planning attorneys at Landskind & Ricaforte Law Group, P.C. We will discuss your situation and work with you closely to establish the right strategy for you. Because you likely want to reduce tax liability, minimize any family problems that gifting or bequeathing assets might present, and ensure that your legacy is handled the way you plan, talk to us. Here, we explore the pros and cons of gifting strategies vs. passing them through your estate.
Gifting Now or Later: Tax Implications
It's a choice that impacts taxes, control, and family dynamics for many of our clients, especially those whose estates are over $2.5 million. Thoughtful timing of asset transfers is critical to minimizing tax exposure.
Making Use of the Annual Gift Tax Exclusion
Some people want to make gifts of their assets while they’re alive rather than wait until their death to pass them to loved ones. These people may want to see their loved ones enjoy the asset, or they may want to avoid paying estate taxes on these assets. However, whether or not these gifts will save you from paying estate taxes depends on the current estate tax exemption amount, current estate and income tax rates, and the income tax basis of the assets you want to gift. Here are some things to consider:
- Estate tax reduction. Any gifts you make within the annual exclusion amount, which is $19,000 per recipient for 2025 or $38,000 for married couples who gift-split, are removed from your estate, reducing the total value of assets that could be subject to estate tax later. The federal estate tax can be as high as 40% on amounts exceeding the lifetime exemption.
- Preserve lifetime exemption. Any gifts you make within the annual exclusion do not count against your unified lifetime gift and estate tax exemption, which for 2025 is $13.99 million per individual ($27.98 million for a married couple). This preserves the lifetime exemption for larger gifts or bequests made outside of the annual exclusion.
- Remove future appreciation. When you gift assets, such as real estate or stocks, that are likely to grow in value, all future appreciation occurs outside of your taxable estate. This can lead to significant tax savings if the assets appreciate substantially.
- No tax filing required. You can make gifts within the annual exclusion amount to an unlimited number of people each year without needing to file a gift tax return. This simplifies tax compliance.
Pros and Cons
On the positive side, gifting allows you to witness the benefits of your gift to a loved one and may reduce the size of your taxable estate, and assets gifted during life aren’t subject to probate. On the negative side, gift tax rules apply—the IRS sets annual and lifetime limits, and there is no “step-up in basis.” The recipient inherits your original cost basis, potentially increasing capital gains tax if they sell the asset.
Bequeathing Assets
When you leave assets to loved ones in your will, it means that the assets are yours until you die—then they become part of your estate. Their value at death is included for potential estate/inheritance tax calculations.
If you leave loved ones assets in your will, those assets will transfer to these heirs after death via probate. However, it’s important to know that some states levy an estate tax or an inheritance tax. In New York, there is no inheritance tax; however, this is an estate tax. In 2025, an estate valued at or below $7.16 million is exempt from New York State estate tax.
Pros and Cons
Bequeathing assets in your will offers you greater control, so you can specify how, when, and to whom assets are distributed; if you leave your assets in a trust, this offers privacy; assets passed through a living trust avoid public probate; and heirs generally receive a stepped-up cost basis, reducing their capital. On the negative side, assets bequeathed in a will may be tied up in probate for months. Additionally, you don’t get to see the benefits of your generosity while you’re alive.
Changes to the Federal Tax Exemption
Under the One Big Beautiful Bill Act (OBBBA), the federal estate tax exemption will increase to $15 million as of January 1, 2026. The increase means that married couples can pass $30 million tax-free beginning in 2026.
This change is now permanent and indexed for inflation, but it’s still important that you reevaluate your estate plan. The OBBBA introduces new planning dynamics that could impact how and when you transfer your assets, especially if you've previously structured your plan around the now-defunct sunset provisions of the Tax Cuts and Jobs Act of 2017 (TCJA). Strategic use of trusts can help remove future appreciation from your taxable estate, provide asset protection, and preserve wealth across generations.
Gifting or Bequeathing: How Either Might Affect Your Family
Depending on your family situation, sibling relationships, and interpersonal dynamics, it may be important to consider the ramifications of gifting your assets while you’re alive or bequeathing them after you die. Here are some things to consider:
Gifts Can Benefit Heirs Now
Gifting may offer meaningful benefits beyond the tax perks. By transferring assets during your lifetime, you get to see your loved ones use the asset in real time, providing you with an intangible personal reward.
Gifts can also be given at an opportune time for your heirs. When you help with a down payment, college tuition, or seed money for a business, it can be life-changing. Gifting allows you to give assets where and when they're needed now.
Bequeathing Assets May Be Viewed as More Equitable
When you bequeath assets to your loved ones after you die, your heirs may feel it’s more equitable. Each receives a share of your estate at the same time, and no one is given assets ahead of someone else.
Let Landskind & Ricaforte Law Group, P.C. Help You Create Your Estate Plan
The decision to gift now or use your estate to gift assets depends on your unique goals and family dynamics. At Landskind & Ricaforte Law Group, P.C., we excel at tailoring estate plans to our clients' needs. From maximizing annual exclusion gifts to fine-tuning your legacy, we'll help you transfer wealth thoughtfully. Read our client testimonials to see how we’ve helped other clients with their estate plans.