Exclusion Gifting

A collection of strategies to help business owners keep more of their wealth.

Key numbers

Every dollar you transfer out of your estate during your lifetime is a dollar that won't be taxed at 40% if your estate exceeds the exemption at death. Annual exclusion gifting is the most straightforward way to do this — no attorneys required, no irrevocable decisions, no complex structures.

Annual Exclusion Gifting

In 2026, you can give up to $19,000 per person per year without triggering any gift tax, without filing a gift tax return, and without drawing down your lifetime exemption. A married couple can give $38,000 per recipient.

There's no limit on how many people you can give to. If you have three adult children and four grandchildren, you could give $266,000 per year as a couple ($38,000 × 7). Done consistently over 10 years, that's $2.66M removed from your taxable estate — without paying a dollar in gift tax or spending an hour with an attorney.

You can give cash, securities, or other assets. Giving appreciated stock has a catch: the recipient inherits your original cost basis (unlike assets inherited at death, which get a step-up). For highly appreciated assets, it's often better to hold them until death and let the step-up eliminate the gain.

529 Superfunding

A 529 plan is a tax-advantaged account for education savings. Contributions aren't federally deductible, but the money grows tax-free and withdrawals for qualified education expenses are tax-free.

Superfunding uses a special IRS election to front-load five years of annual exclusion contributions into a single lump sum. In 2026, that means $95,000 per beneficiary (single) or $190,000 per beneficiary (married couple), contributed all at once. The full amount leaves your estate immediately. You're treated as having made five years of $19,000 gifts, so you can't make additional exclusion gifts to that beneficiary for five years — but the lump sum is out of your estate from day one.

If your child doesn't use all the 529 funds for education, the money isn't trapped. Under SECURE 2.0, unused 529 funds can be rolled into a Roth IRA for the beneficiary — up to $7,000 per year with a $35,000 lifetime limit. The account must have been open for 15 years and the rollover is subject to annual Roth contribution limits. It's not a full escape valve, but it eliminates most of the traditional downside risk of overfunding a 529.

For those with young children, superfunding makes the most sense early. Start a 529 when each child is born, superfund it, let it compound for 18 years, and the account will likely cover a significant portion of college costs without touching any other assets. Funds not used for education roll to Roth — so even in the best case, there's no waste.