Hello from the desk of Marquette Wealth Management's Wealth Advisor, Jordan Elling!
As we reflect and plan to help our clients reach their goals for the calendar year, fulfilling their gifting goals is top of the list. While year-end giving in efforts to support loved ones or contributing to charitable organizations is often driven by the holiday spirit and tax considerations, reframing gifting as a long-term strategy can create a lasting impact for both your family and the causes you support. By incorporating gifting into your broader legacy and financial planning, you can enhance its benefits for years to come. Here are several ways to do so:
Annual Gifting: Transferring Wealth
The annual gift exclusion allows individuals to transfer a certain amount to another person each year without triggering the need to file a gift tax return. In 2025, this exclusion has increased to $19,000 per recipient, making it an effective tool for passing wealth to future generations. Whether contributing to a grandchild’s education, helping a child pay down a mortgage, or assisting a loved one in building financial security, annual gifting can serve as a meaningful component of your overall wealth transfer strategy.
Qualified Charitable Distributions (QCDs): A Tax-Advantaged Way to Give
For individuals with qualified retirement accounts (such as IRAs or 401(k)s), required minimum distributions (RMDs) can increase taxable income, potentially pushing them into a higher tax bracket. However, if you are age 70 ½ or older and charitably inclined, you can make a Qualified Charitable Distribution (QCD)—a direct transfer from your retirement account to a charity or charities of your choice. This strategy allows you to avoid recognizing the distribution as taxable income while providing a tax-free gift to the charity. In 2025, the maximum amount eligible for QCDs is $108,000—a powerful opportunity for charitable giving while managing tax liabilities.
Establishing a Family Foundation or Donor Advised Fund (DAF): Long-Term Philanthropic Impact
For those looking to make a sustained charitable impact, establishing a Family Foundation or Donor-Advised Fund (DAF) can be a valuable solution. These vehicles allow you to make a tax-deductible contribution in the year of funding while enabling you to distribute grants to charities over time. For example, a $100,000 contribution to a DAF in 2025 provides an immediate tax deduction while allowing you to allocate these funds to charities at your own pace—whether over a few years or several decades. If structured strategically, these tools can facilitate multi-generational philanthropy while optimizing tax benefits.
Gifting Appreciated Securities: Maximizing Impact While Reducing Taxes
Long-term investors often hold assets with substantial unrealized gains. Selling these investments could result in capital gains taxes of 15% to 20%, depending on your income. Instead of selling, consider gifting appreciated securities to family members in lower tax brackets or donating them to charitable organizations. By transferring these assets directly, recipients may benefit from lower tax liabilities, while charities can sell the securities tax-free—maximizing the impact of your gift.
Tailoring a Strategy That Works for You
Each of these gifting strategies presents unique opportunities, but there is no one-size-fits-all approach. As part of our commitment to proactive wealth planning, we continuously evaluate these options for our clients—whether during annual reviews or tax planning discussions. If any of these strategies align with your goals, we would be happy to explore their potential benefits and timing based on your unique financial situation.
Jordan Elling, CFP® - Wealth Advisor