Gifting Strategies for Grandparents: Supporting Family While Staying Tax-Efficient

If you're a grandparent, chances are you've thought about how to support your grandchildren—whether it's helping with education, celebrating milestones, or giving them a head start in life. For many high-net-worth families, gifting can be both emotionally meaningful and financially strategic.

As we head into summer—a season full of family time, vacations and big life moments—it's a great opportunity to revisit your approach to gifting. Here are some smart, tax-efficient ways to support your loved ones while preserving your overall wealth strategy.

1. Use the Annual Gift Tax Exclusion

One of the simplest ways to give is by using the annual gift tax exclusion. In 2025, you can gift up to $19,000 per recipient ($38,000 for married couples) without triggering any gift tax or eating into your lifetime exemption.

This strategy is especially helpful if you have several grandchildren—you can transfer a meaningful amount of wealth over time without complicated reporting or tax consequences.

2. Fund a 529 Education Savings Plan

Education is one of the most popular and impactful ways to support younger generations. Contributing to a 529 plan allows your money to grow tax-free when used for qualified education expenses.

Bonus tip: You can "superfund" a 529 plan by contributing up to five years’ worth of annual exclusion gifts in one lump sum—up to $95,000 per child ($190,000 for couples)—without triggering gift tax (as long as you don’t make additional gifts to that person for the next four years).

3. Consider Direct Payments for Tuition or Medical Expenses

Want to make an even bigger impact without using your annual exclusion? The IRS allows you to make unlimited payments directly to educational institutions or medical providers on someone’s behalf, with no gift tax implications.

This can be a great way to cover tuition, private school, or even summer programs, without reducing your annual or lifetime exemption amounts.

4. Gift Appreciated Assets (When It Makes Sense)

If you’re considering transferring stock, real estate, or other appreciated assets to family members in a lower tax bracket, you may help them benefit from lower capital gains taxes when they eventually sell the asset.

This strategy should be approached carefully, as it can affect their financial aid eligibility, tax liabilities, or overall estate planning. Be sure to work closely with your advisor and tax professional to determine if this move aligns with your broader goals.

5. Consider Funding a Life Insurance Policy for Your Adult Kids

Often, younger people find investing more exciting than shoring up the defense for the things that can go wrong and sometimes the basics can get short shrift.  Getting your kids started on this strategic initiative is a way to not only “talk the talk” but to help them “walk the walk” when it comes to preparing for their own financial future.  For example, some modern life insurance policies can include strategic options for chronic care later in life if structured, funded, and managed properly, and the costs associated with such policies are far lower when initiated and funded at younger ages when the cost of the insurance is lower.  Additionally, there can be some significant tax advantages and flexibility afforded by a well-funded life policy whose cash has built to a point the policy can be sustained without further contributions, so getting an early start gives that time to develop before your kids’ retirement. And finally, funding a life policy for your kids can end up creating a legacy that impacts the next generation beyond them, causing your grandkids to have all the more reason to remember you fondly.

6. Talk About the “Why” Behind the Gift

Financial gifts can have a deeper impact when they come with a message. Whether you're helping with a down payment, starting a college fund, or encouraging responsible investing, share your intentions. It’s a chance to pass on not just wealth—but values, responsibility, and legacy.

Final Thoughts

Gifting isn’t just about tax savings—it’s about shaping your legacy and empowering the next generation. With the right strategies, you can give generously, thoughtfully, and efficiently.

If you're considering a gifting plan this year—or simply want to explore the best way to support your loved ones—let’s talk. We can help you integrate gifting into your broader financial picture and ensure it supports both your family and your long-term goals.