A Season For Sharing: Year-End Wealth Strategies

The holidays provide a timely opportunity to focus on the long-term well-being of the people we value most. One of the greatest gifts you can offer is a foundation of financial security for your family. Leveraging philanthropic strategies such as trusts, donor-advised funds, and 529 savings plans can help ensure your family’s financial future while establishing a thoughtful philanthropic legacy. 

Annual Gift Tax Exclusion

Under the One Big Beautiful Bill Act (OBBBA), the federal lifetime estate and gift tax exemption will permanently increase to $15 million per person beginning in 2026. For 2025 and 2026, the annual gift tax exclusion remains at $19,000 per recipient ($38,000 for married couples through gift‑splitting). Gifts above the annual exclusion may require filing IRS Form 709 and could count toward your lifetime exemption. Remember to be aware of your state level estate and gift taxes, as these may vary significantly based on location.

Trusts:

Irrevocable trusts, including Charitable Remainder Trusts and Charitable Lead Trusts, are useful tools for managing assets and distributing funds amongst your family members. These trusts are also excellent philanthropic vehicles, and can be helpful when gifting to your children, as they allow for greater donor control over assets.

• To operate a Charitable Remainder Trust, develop a plan to contribute assets and establish how frequently your beneficiaries will receive fixed and variable income. The balance will be transferred (or remain) to your selected charity or charities.
• The Charitable Lead Trust works in the opposite manner, providing regular cash flow to a chosen charity or charities for a set period. Once the set period ends, the remaining assets are distributed to your designated beneficiaries.

Donor Advised Funds (DAF):

Donor Advised Funds (DAF) are a tool that have rapidly grown over the last 20 years and are the fastest growing vehicle in philanthropy. The process to set up a DAF is simple and involves a fiscal sponsor who manages the funds and legal aspects. Once the fund is established, the donor may receive a tax deduction on the assets that have been contributed when you file your taxes. The donor can also recommend how the assets are invested and when to grant proceeds to the charity or charities listed as part of the DAF.

DAFs offer flexibility with no mandatory distribution timeframe, meaning funds can remain in the account for the life of the donor.  Compared to traditional foundations, DAFs are extremely cost effective and accessible to families of varying income levels.

529 Plan:

A great way to share wealth with your children or grandchildren is through a 529 savings account. A 529 savings account allows you and your spouse to contribute 5 years' worth of annual exclusion gifts upfront for educational expenses without affecting your lifetime federal gift tax exclusion. Accelerated gifting in 2025 and 2026 allows a contributor to combine five years of gifting for up to $95,000 for an individual contributor, or $190,000 for couples filing jointly in a single year, as long as no additional gifts are made until five years have passed. Contributions must be reported on IRS Form 709 (gift tax return), even if no gift tax is due. Learn more about 529 accounts and how they can support multigenerational wealth here.

Qualified Charitable Distributions (QCDs):

Individuals over the age of 70½ can make QCDs from their IRAs to a qualified charity, potentially avoiding income tax on the distributed amount. QCDs may also help satisfy your annual required minimum distribution as long as certain rules are met. As always, please speak with a tax advisor to see which of the mentioned strategies may apply to you.

By embracing thoughtful family gifting strategies, you can help ensure your loved ones are set up for long-term success while building a meaningful philanthropic legacy. This holiday season, consider using these tools to share your generosity in ways that support both your family and the causes you cherish. Speak with an Oppenheimer Financial Professional today to learn more.