Strategic Wealth Partners was acquired by Kovitz Investment Group Partners, LLC ("Kovitz"), a registered investment adviser with the SEC on May 1, 2024. Strategic Wealth Partners is now a division of Kovitz and its registered investment adviser. Materials created prior to this date were created by Strategic Wealth Partners and are accurate as of the time of publishing.
When we reflect on what to do with our wealth as we grow older, we tend to first think about where our money will go after we pass. Recently though, more and more people are shifting their perspective on passing down their wealth from an inheritance-focused view to a more immediate, experience-focused one.
Instead of saving every available dollar for their estate, people are using some of those assets to fund unforgettable family vacations, meaningful experiences with friends, and other memories that last a lifetime. People are also investing in their loved one’s lives while living, offering to contribute more to wedding costs, housing down payments, and business funding.
And we completely understand. Coming out of a years-long pandemic that rattled the world and saw many lose their loved ones, we have seen our clients place more value than ever on family time.
For many, the answer is to change the way we look at gifting. That is, gifting doesn’t necessarily have to be a term for the protocols we put in place to take care of our loved ones after we’re gone. Rather, we can expedite our gifting to increase the impact we have on our families and on the causes we care about right now.
Gifting sooner rather than later can be a great way to create meaningful experiences while you’re still alive.[1] In this article, we want to share how our team can help you determine your gifting capacity, show you options for optimizing your giving, and help you execute a gifting strategy that fulfills your family’s wishes.
Include your family and trusted partners in the discussion
A smart first step in planning how you give is defining your family’s gifting capacity. Consulting with your wealth advisor to do a cash flow analysis and create a long-term financial plan will help ensure you are aware of how much you’re able to give throughout your life. A trusted advisor can help ensure that you optimize your giving in a responsible and safe way. Once you’re clear and confident in your gifting capacity, your family can move forward confidently in making the most out of your giving.
If you’ve decided to do some of your gifting now instead of waiting for the estate plan to kick in, it’s important to include your family in the discussion as well. As Ashley Bebeau pointed out in her article from March, poor communication about family wealth can lead to poor decisions down the road.
Loved ones who aren’t clued into the financial situation of their family may feel less empowered in stewarding their inheritances or less capable in deciding the future of their family’s nest egg. This discussion around family wealth is an ongoing one; as your life changes, so does your financial situation, your values, and your wishes. Keeping your loved ones up-to-date on the family’s wealth can better prepare them to carry out your wishes when you’re gone.
Ways to give
While the options for giving during your lifetime are endless, the following ways can be worth considering to optimize your giving. We are more than happy to help discuss these options to guide you in building a smart and beneficial plan for your family.
Annual federal gift tax exclusion: You can give up to $17,000 (as of 2023)[2] to as many people as you’d like during the year. Spouses are entitled to separate annual gift tax exclusions, so you can each gift up to $17,000 per year per individual to as many people as you’d like.
Lifetime gift tax exemption: In addition to the annual gift tax exclusion, you can gift up to $12.92 million during your lifetime (as of 2023) without you or the receiver paying gift tax.[3] This $12.92 million can be any combination of assets, including cash. This is an easy way to pay for the memorable experience you may want to fund.
Each individual can give up to $12.92 million, and, again, this is an entirely separate exemption from the annual gift tax exclusion. So, for example, if you gift five of your closest relatives $17,000 and your spouse gifts three additional people $17,000 in 2023, those gifts will not reduce you or your spouse’s lifetime gift tax exemption of $12.92 million.
The lifetime gift tax exemption and the annual federal gift tax exclusion provide a tax-efficient way to give during your lifetime; and if you’re gifting less than the annual gift tax exclusion amount, you won’t have to worry about reporting the gifts, either.
If you do decide to gift more than $17,000 to any person during the year, be sure to keep your estate planner and your CPA in the loop, as these gifts will reduce your estate while cutting into your estate tax exemption.
Funding an education: Setting up education funding for your children or grandchildren can create experiences and value for your family. Many families set up college funds, but there are also alternative education opportunities, such as study-abroad programs, that can teach your children to value investing in education through experiences at an early age.
Including your advisor and your family in these decisions can set you up for an impactful legacy and future family success.
Donor-advised funds: Through a donor-advised fund, or DAF, you can set aside assets to be donated to charitable organizations later on.[4] Your contributions to a DAF are tax deductible for the year in which you make them, meaning you can secure the tax deduction now without having your heart set on which charities the fund will support. Your contributions to a DAF can also grow if the fund performs well, meaning an even bigger impact down the line.
Another impactful idea can be including your loved ones in advising on your DAF, so that they can experience the joy of giving. They can suggest how to give and learn your passions around giving, so that they learn the benefits of generosity and carry on your legacy.
Closing thoughts
If you decide that you want to expedite your giving in order to have a meaningful impact now, there are a few factors to consider. First, you should make sure that your financial plan and current financial situation support gifting. Second, it’s a good idea to update your estate plan to reflect your desired gifting strategy. And lastly, be sure to keep your accountant in the loop so you can ensure that your gifting plan is carried out in a tax-efficient manner.
If you’d like any help with this process, we invite you to contact our team to talk about how to make your gifts have the greatest impact during your lifetime.
[1] Wall Street Journal, Consumers Continue to Rethink Priorities Amid Lingering Pandemic (link)
[2] IRS, Frequently Asked Questions on Gift Taxes (link)
[3] Forbes, IRS Announces Estate And Gift Tax Exemption Amounts For 2023 (link)
This article contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Reading or utilizing this information does not create an advisory relationship. An advisory relationship can be established only after the following two events have been completed (1) our thorough review with you of all the relevant facts pertaining to a potential engagement; and (2) the execution of a Client Advisory Agreement. There is no guarantee that the views and opinions expressed in this article will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.
Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (http://www.adviserinfo.sec.gov).
For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (http://www.stratwealth.com/legal).
Every year, we encourage our clients enrolled in a Medicare Part D stand-alone prescription plan to take a few minutes to verify that their existing plan remains the best option for them. For the 2025 plan year, there’s a little more urgency, as some big changes are occurring that have never been a factor before.
Starting in 2025, Medicare is setting a $2,000 cap on out-of-pocket drug costs for those with Part D drug plans. From brokers I have spoken with, this has caused a lot of turmoil in this market as some providers are changing what drugs will be covered under their formularies, co-pays, deductibles, and coverage of brand versus generic. If you were happy with your Part D drug plan in 2024, it could be a different story in 2025.
In the 1950s, Harry Markowitz was one of the creators of Modern Portfolio Theory (MPT). In summary, he was able to create an “optimal” portfolio of 60% stocks and 40% bonds. Over time, this mix generated most of the returns of stocks with much less downside risk. This was the early introduction of the asset allocation issue that is critical to portfolio construction. However, is this still the optimal way to create a portfolio?
Our team regularly reads articles from industry peers and trusted resources to stay up to date on financial markets. We enjoy reading about topics related to economics, investments, current events,...
