Is a Living Inheritance Right for You?
As you work through your estate plan, you may find yourself reflecting on the kind of legacy you want to leave for your heirs. Traditionally, inheritances are passed down after death. But that’s not the only option.
A growing number of individuals are choosing to give a living inheritance—the act of transferring assets to loved ones while you’re still alive. This approach allows you to see the impact of your generosity firsthand and potentially streamline your estate.
Before you make a decision, consider the advantages and drawbacks of gifting during your lifetime.
The Pros
See the Impact of Your Gifts
One of the most meaningful benefits of a living inheritance is the ability to witness how your support helps loved ones. Whether it’s funding a grandchild’s education or helping your child buy a home, you can be part of the moment and experience the joy of giving.
Avoid Probate
Assets gifted during life aren’t subject to probate. Reducing your estate through lifetime giving can simplify the process for your heirs and ease their burden during an emotionally difficult time.
Potential Tax Benefits
As of 2025, you can give up to $19,000 per recipient each year without filing a gift tax return. These annual exclusions can gradually reduce the size of your estate, possibly lowering future estate taxes.
More Control Over How Assets Are Used
Giving while you’re alive allows you to have conversations about how your gift should be used—such as helping with a down payment or paying down debt. That clarity can help ensure your generosity aligns with your intentions.
Proper estate planning is designed to safeguard your hard-earned assets and help provide you and your heirs with increased peace of mind. Ready to learn the basics? Join Wealth Transfer Advisor Alaina Davalos and Director of Wealth Transfer Dom Parillo to learn how to protect your family’s financial future and document your final wishes.
The Cons
Risk to Your Own Financial Security
Life can be unpredictable. If you give away too much too soon, you may leave yourself financially vulnerable. Large medical expenses, long-term care needs, or simply living longer than expected could strain your resources later in life.
Family Tension
Uneven gifts—whether intentional or not—can create rifts among family members. Even if your decisions are well-intentioned, they can sometimes lead to resentment or conflict.
Loss of Step-Up in Basis
Assets passed down after death can receive a step-up in tax basis, reducing capital gains taxes for your heirs if they sell. Gifts made during life retain their original basis, which may result in a larger tax bill when sold. It’s also a good time to review your beneficiary designations to avoid missteps that could complicate your intentions.
Gift Tax Filing Requirements
Gifts above the annual exclusion limit require filing a gift tax return and reduce your lifetime exemption. While this may not trigger immediate taxes, it’s an important consideration for larger estates.
When a Living Inheritance Might Make Sense
If you’ve planned for worst-case scenarios and still have more than enough to support your own needs, a living inheritance may be worth exploring. For many, the chance to watch their wealth create opportunities for loved ones is a powerful motivator.
It may also be a strategic move if you’re looking to reduce the size of your taxable estate or simplify the inheritance process for your family.
Final Thoughts
A living inheritance isn’t right for everyone, but for some, it can offer a rewarding way to share wealth and values in real time. If you’re considering this path, a financial advisor can help you weigh your options and build a strategy that supports both your needs and your legacy.