How Gift Taxes Can Impact a High-Asset Estate Plan
Individuals who have built significant wealth often have estate planning concerns that extend beyond deciding who should inherit their property.
For a high-asset estate, lifetime gifting can become part of a broader strategy for transferring wealth to children, grandchildren, and other loved ones. But gifting also carries important federal tax considerations.
Understanding how gift taxes, annual exclusions, and the federal estate and gift tax exemption work together can help families make more informed decisions about when and how to transfer wealth.
How Does the Federal Gift Tax Work?
The federal gift tax generally applies to certain transfers of money or property made during a person's lifetime for which the donor does not receive full value in return.
However, not every gift creates a gift-tax bill.
The federal tax system provides both an annual gift-tax exclusion and a much larger lifetime estate and gift tax exclusion.
Understanding the distinction between the two is particularly important for individuals with substantial estates.
What Is the Annual Gift Tax Exclusion for 2026?
For 2026, an individual can generally give up to $19,000 per recipient without the gift counting against the individual's lifetime federal estate and gift tax exclusion.
The annual exclusion applies separately to each recipient.
For example, an individual could potentially give:
$19,000 to one child
$19,000 to another child
$19,000 to a grandchild
$19,000 to another qualifying recipient
Each gift may qualify separately for the annual exclusion.
For married couples, each spouse has a separate annual exclusion. This means two spouses could potentially give a combined $38,000 to the same recipient in 2026, assuming the applicable requirements are satisfied.
The IRS confirms that the annual gift-tax exclusion remains $19,000 per recipient for 2026.
What Happens If You Give More Than $19,000?
This is where gift-tax planning is frequently misunderstood.
Giving someone more than the annual exclusion amount does not necessarily mean you immediately owe gift tax.
Instead, the amount above the annual exclusion may generally count against your lifetime federal estate and gift tax exclusion and may require the filing of a federal gift-tax return.
For individuals making substantial gifts, keeping accurate records of lifetime transfers becomes increasingly important because taxable gifts made during life can affect the federal estate-tax calculation later.
The Federal Estate and Gift Tax Exclusion Is $15 Million in 2026
For 2026, the federal basic exclusion amount is $15 million per individual.
That represents an important change from prior years. For comparison, the exclusion was $13.61 million in 2024 and $13.99 million in 2025.
Because estate and gift tax laws and thresholds can change, high-net-worth individuals should periodically review their estate plans rather than building a long-term strategy around an outdated exemption amount.
Related reading: When Should You Update Your Estate Plan?
Lifetime Gifting Can Be Part of a Wealth-Transfer Strategy
Some individuals prefer to transfer a portion of their wealth during their lifetime rather than leaving their entire estate to beneficiaries after death.
There can be practical reasons for doing so.
Lifetime gifting may allow someone to:
Help a child purchase a home
Assist grandchildren with education or other needs
Support family members while the donor is still alive
Begin transferring family wealth to the next generation
Reduce assets remaining in the donor's estate
See loved ones benefit from their generosity
For families with substantial estates, consistent annual gifting can transfer meaningful wealth over time.
Consider a married couple with three adult children.
If each spouse gave each child $19,000 in 2026, the couple could potentially transfer:
$19,000 × 2 spouses × 3 children = $114,000
using their combined annual exclusions for that year, assuming the gifts otherwise qualify.
Over multiple years—and particularly in larger families—annual gifting can become a significant component of an intergenerational wealth-transfer strategy.
Gifts Above the Annual Exclusion Require More Careful Planning
High-asset families are not necessarily limited to giving $19,000 per person.
Larger lifetime transfers may also be possible, but they can have additional reporting and tax consequences.
A gift above the annual exclusion may use part of the donor's lifetime exclusion. Depending on the circumstances, the donor may also need to file IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
This is why substantial gifting should be coordinated with appropriate estate-planning and tax professionals.
The goal isn't simply to give assets away.
The goal is to understand how a transfer affects the donor's remaining wealth, tax position, estate plan, and intended beneficiaries.
Consider Trusts Alongside Lifetime Gifts
Direct gifts are only one way to transfer wealth.
For some high-asset families, a trust can provide additional control over how transferred property is managed and ultimately distributed.
Rather than giving substantial assets directly to a beneficiary, a properly structured trust may allow the person creating it to establish terms governing how and when beneficiaries receive distributions.
This can be particularly useful when beneficiaries are:
Minors
Young adults
Financially inexperienced
Facing creditor concerns
In need of long-term financial management
Related reading: Three Types of Beneficiaries Who May Need the Protection of a Trust
Irrevocable Trusts May Play a Role in High-Asset Planning
Certain high-net-worth estate plans may also incorporate irrevocable trusts.
Unlike a revocable trust, an irrevocable trust generally requires the person creating it to relinquish substantially more control over transferred property.
Depending on how a trust is structured and applicable tax law, transferring assets to certain irrevocable trusts may play a role in advanced wealth-transfer and estate-tax planning.
These strategies are highly fact-specific and should not be implemented solely for the purpose of moving assets out of an estate without considering the broader legal and tax consequences.
Related reading: What Is an Irrevocable Trust and When Does It Make Sense for Your Estate Plan?
Estate Planning Is About More Than Reducing Taxes
Tax planning can be important for high-asset estates, but minimizing taxes should not be the only objective.
A comprehensive estate plan should also address:
Who ultimately receives your wealth
When beneficiaries receive it
Who manages assets on their behalf
How family businesses or investment assets are handled
What happens if you become incapacitated
How beneficiary designations coordinate with trusts and wills
Whether assets should pass through probate
Your charitable and legacy goals
Some assets may also transfer outside of the probate estate through trusts, beneficiary designations, or ownership arrangements.
Related reading: Three Estate Planning Strategies to Keep Assets Out of an Estate
High-Asset Estate Plans Should Evolve With Tax Law
An estate plan created several years ago may have been designed around tax thresholds, asset values, and family circumstances that are no longer current.
That's particularly important for families whose wealth has grown substantially.
Changes in:
Business value
Investment portfolios
Real estate holdings
Federal estate and gift tax laws
Family circumstances
Beneficiary needs
can all justify reviewing an existing plan.
A strategy that worked when an estate was worth $5 million may require a different approach after the estate grows significantly.
Develop a Coordinated Wealth-Transfer Strategy
Lifetime gifting can be an effective component of estate planning, but it should be coordinated with the rest of the plan.
For individuals and families with substantial assets, decisions involving gifts, trusts, beneficiary designations, and other wealth transfers can have long-term legal and tax consequences.
Understanding how the annual gift-tax exclusion and lifetime estate and gift tax exclusion interact is an important starting point.
Hyde Legal Group helps individuals and families evaluate estate planning strategies based on their assets, beneficiaries, and long-term legacy goals.
If your estate has grown substantially or you are considering significant lifetime gifts, contact Hyde Legal Group to discuss how those decisions may fit within your broader estate plan.
