Patriarchal Precedent
Gift giving is a major part of today’s culture. Gifts are part of many aspects of life; birthdays, holidays and anniversaries. Giving gifts is a way to show appreciation and affection to our loved ones and those close to our lives.
Gifting to loved ones is also a powerful estate planning tool and can strategically guide affluent families into preserving their wealth for generations.
Luckily, a patriarchal precedent has been given to us by a tent dweller in the land of Canaan. The Bible tells a story of Abraham giving gifts to his heirs in Genesis 25. Genesis 25:5-6 states, “Abraham gave all he had to Isaac. But to the sons of his concubines Abraham gave gifts, and while he was still living, he sent them away from his son Isaac, eastward to the east country” (Genesis 25:5-6, ESV). Abraham was blessed by God and was a very wealthy man. His herds were large, and many people lived with him, including servants and fighting men. To ensure a proper transfer of his property, Abraham, at the end of his life, gave gifts to all his children but left most of his estate to Isaac. Abraham was a generational minded man, and he made sure himself that all his children received their gift while he was alive, so that what he desired was accomplished.
Giving substantial gifts during one’s lifetime, like large amounts of money or a house, must be well thought through as there may be many implications to consider. Tax implications and exclusion limits must be reviewed when considering giving a gift during one’s life. Today, in 2024, the annual gift tax exclusion is $18,0001. Any gifts given that are equal to or less than $18,000 have no tax consequences. Any amount over this exclusion may be subject to tax, based on the lifetime estate tax exclusion ($13.61 million in 20241). Taxes on gifts may not be incurred if an individual’s estate is less than the estate tax exclusion ($13.61 million in 2024). If a gift is given to a spouse or charity, those gifts qualify for unlimited deductions and will not be subject to taxes upon death. Taxes may be imposed on the surviving spouse when they die, thus making the unlimited marital deduction a postponement of estate taxes, not an avoidance of them completely.
Now, giving gifts before death is a powerful strategy for estate planning for two reasons. The first is that it may lower the estate and cause less and/or no estate taxes due. Second, it provides for the future generations, while adding the benefit that the donor receives by watching their gifts blessing others. This may look like giving a house or a car, funding education, or even giving a rare collectible or collection of items to a child who always dreamed of obtaining one day. The living benefits of giving gifts may sometimes outweigh waiting to transfer property at death.
Gifting to heirs or others is a powerful estate strategy that has been implemented since the days of Abraham. We can learn from him and take away his heart posture to preserve his wealth for generations, while ensuring the success of all his children.
If your desire is to give like Abraham, while understanding the complexities of today’s tax rules, set up a time to meet with the team at Cornerstone Financial, so we can help you leave an impactful legacy for generations to come.
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OneAscent Financial Services, LLC (“OAFS”), d/b/a The Cornerstone Financial Group, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly