By Scott Hamilton, CFP®
As a parent, your children’s long-term well-being is a top priority. You’ve worked diligently to build financial stability, and now you may be questioning whether the traditional model of inheritance is still the best path forward. More and more families are asking: Why wait to make a meaningful impact?
If you’re considering ways to support your loved ones during your lifetime, this article walks you through 5 powerful accelerated inheritance strategies and can help you determine if this proactive approach aligns with your financial goals.
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What Is an Accelerated Inheritance?
An accelerated inheritance refers to an inheritance given during your lifetime, rather than at death. It is a way for parents to provide financial support to their children while they are still around to enjoy it, rather than leaving assets and money after they pass away.
Accelerated Inheritance Strategies
An accelerated inheritance doesn’t have to look the same as a traditional inheritance. There are many ways to share your wealth with your children during your lifetime, including:
Lifetime Gifting
You don’t need to wait until you’ve passed away to give money and assets to your kids or grandkids. In 2025, the annual gift exclusion is $19,000 per year per person. If you’re splitting the gift with a spouse, you can give up to $38,000. So that means a married couple with two kids can give $38,000 to each child for a total of $76,000. If you and your spouse choose to split gifts, you are generally required to file Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return. This form is necessary to report the gift-split election even when no tax is due.
Lifetime gifting can help you strike a balance between taking care of your family and depleting your own retirement assets, and it can also help reduce the taxable portion of your estate.
It’s worth noting that once you gift more than the annual exclusion, the excess amount spills into the “lifetime exclusion bucket.” You must use this entire amount before the IRS requires you to pay gift tax. For 2025, the current lifetime exclusion is $13.99 million for individuals and $27.98 million for married couples.
But keep in mind, these limits are likely to drop starting in 2026 due to provisions in the Tax Cuts and Jobs Act. While the projected reduction could be around $5 million per person (adjusted for inflation), the exact amount will depend on legislative updates and inflation rates. If you think your estate is going to be subject to estate taxes once the exclusion amount resets, you may want to consider taking advantage of the current exclusion to make gifts.
Gifting Appreciated Securities
Many parents wish to give large gifts to their adult children, usually in the form of a wedding gift or down payment for a house. There is a common belief that cash is the best way to give these gifts. In reality, any cash gift above the annual exclusion will trigger potential gift tax consequences. Gifting appreciated securities can be a way to give an accelerated inheritance to your kids while reducing your tax liability on capital gains and reducing the value of your taxable estate.
For those who are not eligible for the 0% capital gains tax rate due to income thresholds, consider gifting highly appreciated assets to an adult child instead of selling them yourself. Chances are your kids are in a lower tax bracket, which will result in a reduced or eliminated tax liability if they sell the investment themselves.
Fund a Family Vacation
More and more, successful parents are thinking less about leaving money to their children and instead looking to enjoy the fruits of their lifelong labor through quality time with their family. Experiences shared as a family will often mean more than cold, hard cash. Rather than safeguarding your wealth to be left after you’re gone, consider buying a vacation home where everyone can gather. Or take your whole family on that trip you’ve always dreamed about. These experiences will produce lifelong memories that are likely more impactful than leaving a larger inheritance.
Consider a 529 Plan
Another great way to transfer wealth to your children and grandchildren is through the use of a 529 college savings plan. There is a special provision that allows donors to contribute 5 years’ worth of gifts as a lump sum. This means an individual can gift up to $95,000 ($19,000 x 5) and a married couple can gift up to $190,000 without incurring gift taxes! The beneficiary can then withdraw the funds and investment growth tax-free to pay for qualified education expenses. If the child chooses not to go to college, the funds can be transferred to another beneficiary or withdrawn at the marginal tax rate and charged a 10% penalty.
The individual who initiated the 529 plan (the plan owner) has the option to alter the beneficiary—and without incurring any penalties—provided that the new beneficiary qualifies as an “eligible family member.” Addressing concerns among families regarding the potential confinement of funds within a 529 plan due to limited beneficiary change options, SECURE 2.0 introduces a provision, under which 529 plan beneficiaries can transfer some unused funds directly to a Roth IRA without facing penalties or triggering taxable income recognition.
Create an Irrevocable Trust
If you have concerns about how gifted or inherited funds will be used by your kids, or you want to leave specific instructions on how the money should be spent, consider creating an irrevocable trust. Utilizing an irrevocable trust can be an effective tool to reduce your estate tax and provide guidance for your heirs on your desires for the inheritance. It is permanently binding and you cannot change the terms or beneficiaries. Depending on how the trust is structured, your beneficiaries can receive payments before you pass away, making this an effective vehicle for accelerated inheritance.
Making the Right Choice
While it can be a valuable way to support your children and share your wealth, an accelerated inheritance is not a decision to make lightly. It is important to consider various factors, like:
- Retirement security: Before giving an accelerated inheritance, it is essential to assess your own financial situation and make sure you have enough savings to support your retirement goals. Remember, a well-planned and thoughtful accelerated inheritance can be a valuable way to support your children, but it should never come at the expense of your own financial stability.
- Level of financial responsibility: It’s important to assess your child’s level of financial responsibility before giving them an accelerated inheritance. Giving money to children who are not mature enough to handle it can lead to poor financial decisions, such as overspending, debt accumulation, or even becoming victims of scams.
- Taxes: When gifting money or assets to your children, there may be tax implications to consider, especially if the gifts are above the annual exclusion amount. Therefore, it is crucial to understand how an accelerated inheritance will impact your tax liability before making any decisions.
Plan Ahead With Accelerated Inheritance Strategies
If you’re thinking about giving your children a financial gift during your lifetime, it’s wise to evaluate whether accelerated inheritance strategies align with your long-term financial goals. Making these decisions requires thoughtful planning and a clear understanding of the potential impact on your overall wealth and legacy.
Partnering with a trusted financial advisor can help you weigh the pros and cons, identify tax-efficient solutions, and keep your generosity supporting both your family and your financial well-being.
At Hamilton Financial Planning, LLC, we focus on legacy planning and personalized financial strategies to help our clients make confident, informed choices. If you’re ready to explore your accelerated inheritance options, reach out to us. Schedule a complimentary get-acquainted meeting online, call 512-261-0808 or email scott@hamiltonfinancialplanning.com.
About Scott
Scott Hamilton is founder and chief financial officer at Hamilton Financial Planning, a wealth management firm that specializes in providing comprehensive financial planning for retirees. With over 20 years of experience in the financial industry, and having completed over 250 financial plans for retirees across all industries, but mostly the oil and gas industry, Scott is passionate about providing his clients with the tools and insight they need to achieve their financial goals. He has a Bachelor of Business Administration in finance from Texas State University and an MBA in international finance from Pepperdine University. Scott has also been happily married to his wife, Gayle, for over 25 years. To learn more about Scott, connect with him on LinkedIn.
