COREVALUATION​

Gifting Opportunities: Understanding How to Plan Ahead

​Gifting can be a powerful tool for financial planning, but it's important to understand the rules. Here's a breakdown of key gifting strategies and tax considerations.

What is the Gift Tax?

The gift tax applies to the transfer of property or money to another person without receiving something of equal value in return. Whether or not you intend a transfer to be a "gift," the IRS may classify it as such if it meets their specific regulatory criteria. While this can result in a tax liability or a filing requirement, understanding the various federal exemptions is key to protecting your assets and reducing your overall taxable estate.

"The hardest thing in the world to understand is the income tax." — Albert Einstein

Maximising the Unified Federal Exemption

 The window for tax-efficient wealth transfer has expanded significantly. For 2026, the federal exemption for estate, gift, and generation-skipping taxes has risen to $15 million per individual. This allows a single person to transfer up to $15 million during their lifetime or at death without incurring federal transfer taxes. For married couples, this combined exemption reaches an unprecedented $30 million. Given the evolving legislative landscape, these generous limits provide a unique opportunity to safeguard your legacy through proactive valuation and planning.

Leveraging the Annual Gift Tax Exclusion 

Beyond your lifetime exemption, you can utilize the "annual gift tax exclusion" to transfer wealth each year without any tax consequences. For 2026, this allowance is $19,000 per recipient. This means you can give up to $19,000 to as many individuals as you choose—children, grandchildren, or friends—without reducing your lifetime exemption or triggering a gift tax return. For married couples, "gift-splitting" allows for a combined annual transfer of $38,000 per recipient, providing a powerful tool for systematic wealth transfer and estate reduction.

Accelerated Funding for Education: The 529 Superfunding Strategy

One of the most powerful tools for wealth transfer is the ability to "front-load" a 529 College Savings Account. In 2026, the IRS allows you to contribute up to five years of annual gift exclusions in a single lump sum without tapping into your lifetime exemption.

Individuals can contribute up to $95,000 ($19,000 × 5 years) per beneficiary.  Married couples can contribute a combined $190,000 ($38,000 × 5 years) per beneficiary.  This "superfunding" strategy allows assets to begin growing tax-free immediately. Furthermore, you can still pay for a student's qualified tuition or medical expenses directly to the institution without limit. These direct payments do not count toward your annual $19,000 limit, allowing you to maximize both immediate support and long-term estate reduction.

Locking in Your Legacy: The "Anti-Clawback" Advantage

With the federal exemption now at a historic $15 million per individual (and $30 million for married couples), 2026 presents a premier opportunity for high-net-worth estate planning. While the recent OBBBA legislation made these high limits permanent, savvy planners know that tax laws can always shift. The IRS "anti-clawback" regulations provide a vital safeguard: if you utilize these elevated exemptions now through large taxable gifts, those transfers are "grandfathered" in. This ensures that even if future administrations reduce the exemption, your prior gifts remain tax-free and will not be retroactively taxed.

Smart Planning. Sound Judgement. Lasting Results.

Smart financial planning begins with understanding the opportunities available under today’s tax laws. By leveraging current gifting allowances, you can make a significant impact on your estate’s future tax burden.

Don’t leave your legacy to chance. We are here to provide the expert guidance and precise valuations you need to move forward with certainty. Contact Core Valuation LLC today to schedule a consultation and take the first step toward a more secure financial future.