The short version
An inheritance from parents usually arrives late in the child’s own life. For a married couple who are both 65 today, our calculation from the Social Security Administration’s life table puts the second death at about 90 at the median, so children born when the couple was 30 would typically inherit at about 60, and 61 is the single most likely age. By then the first home, the young family, and the college bills are usually behind them. Giving while living moves some of that help to the years when it does the most good, and it lets the giver take part: the trip taken together, the down payment, the tuition bill paid while the giver can see what it does.
The tax rules leave a great deal of room. In 2026 each person can give $19,000 outright to as many people as they like with nothing to file, and tuition and medical bills paid directly do not count at all. A larger gift generally means a gift tax return, not a tax bill, until the giver’s lifetime taxable gifts pass $15 million. The harder questions are how much the household’s own plan can support, which asset to give, and how to treat children whose situations differ. We lean toward encouraging giving at every stage, without pushing it, with the amount and the form, whether money, time, or mentorship, shaped by the household’s own plan and by when the gift would mean the most to the people receiving it.
When an Inheritance Actually Arrives
The usual picture of an inheritance is a parent passing money to a child who is just getting started. For most families, the calendar does not work that way. We ran the numbers for a married couple who are both 65 today, using the Social Security Administration’s 2023 period life table, the one published with the 2026 Trustees Report. The first of the two deaths comes at about 79 at the median. The second, the one at which most estates pass to children, comes at about 90 at the median.
For children born when the couple was 30, that means an inheritance typically arrives at about 60, and 61 is the single most likely age. Nearly three in four of those children (72%) would inherit between 55 and 69, and fewer than one in ten (9%) before 50. Put another way, when the children turn 55, there is a 76% chance that at least one parent is still living; when they turn 60, it is about a coin flip.
Most children inherit between 55 and 69, and 61 is the most likely age
Child’s age when the second parent dies, for a married couple who are both 65 today, with children born when the parents were 30
Two things suggest the real ages run later, not earlier. A period table holds each age’s death rate at its level in a single year, so it builds in no further gains in longevity, and research has long found that people with higher incomes live longer than average. For many of the families we work with, the second death is likely to come later than the table suggests, and the inheritance later with it.
What the timing means. At 60, most children are near the top of their own careers. The first home is bought or mostly paid for, their own children are grown or nearly so, and their retirement is within sight. An inheritance at that age is welcome, but it is rarely the help that changes a life. It can even create a tax problem. A large pre-tax account left to a child in their peak earning years must generally be emptied by the end of the tenth year after the parent’s death, with a minimum withdrawal each year along the way when the parent had already begun required distributions, and each withdrawal is taxed at the child’s rates, a schedule our article on the 10-year rule for inherited IRAs explains. The help that tends to change the most comes earlier: a down payment at 32, child care at 35, a grandchild’s tuition at 19, a business started at 40.
The Question We Start With
When a client asks whether to give now or leave it for later, we do not start with the tax code. We start with two questions. Would you like to take part in this gift? And when would it be most valuable to the people receiving it?
The first question is about the giver. A gift made during life is one the giver gets to see: the grandchildren on the beach during a trip the grandparents paid for and came along on, the young couple moving into a home they could not yet have bought alone, the church starting a ministry the household helped fund. A gift made at death is real generosity too, but the giver is not there for it. Taking part can be a large share of the joy, and seeing a gift land can change what a giver wants to give next.
The second question is about the people receiving it. The same $50,000 means something different to a 32-year-old couple with a new baby than to a 60-year-old couple with an empty nest, and something different again to a grandchild starting college. Asking when a gift would matter most often moves it earlier, and sometimes changes its form: help with a down payment rather than cash in an account, tuition paid directly to the school, or a family trip rather than a check.
Not all giving is money. We encourage giving at every stage of life; what changes from one household to the next is how much and in what form. Time is a gift: the grandparent who picks the children up from school two days a week gives a working couple something money cannot easily buy. So is mentorship: helping a son-in-law think through starting a business, showing a granddaughter how to read a lease, or teaching a class at church. For a household whose plan is still tight, time and mentorship may be the larger part of what it gives for a while, and that is still giving.
For couples, these conversations start at home. We encourage each spouse to think it through, then the two of them together, before anything is decided; we help turn that thinking into a plan; and when it fits, the conversation widens to the children or others the household may give to. For many families the giving takes shape in their Statement of Financial Purpose, the short statement of what the money is for that every plan we build begins with.
How Much a Plan Can Give
A gift is permanent, which is why the household’s own plan comes first. We lean toward larger gifts only once the givers’ own retirement is secure, the same standard we apply to a grandchild’s education, and toward sizing gifts the way the rest of retirement spending is sized.
In the plans we build, regular giving can be part of core spending, the spending a household intends to keep whatever the markets do: the yearly support for a church, a standing gift to each grandchild’s education account. Larger gifts usually sit in the adaptive layer, the part of spending that can rise in strong years and shrink or wait in weak ones, using the core and adaptive labels from Michael Kitces’s 2019 work at Kitces.com, which built on Jonathan Guyton’s. The raises and cuts come from risk-based guardrails, built on the probability-of-success research Derek Tharp and Justin Fitzpatrick published at Kitces.com, an approach we explain in our article on retirement spending guardrails. That split lets a household give generously in a good year without committing to the same gift in a bad one.
A one-time gift gets modeled before the check is written. A $100,000 gift toward a child’s home is a $100,000 smaller portfolio. In a plan with guardrails set in advance, we show what that does to next year’s spending, to the portfolio value that would bring a cut, and to the margins the household has named for other purposes. Two margins matter most. A long-term care reserve, for a household that plans to pay for care itself, is a line we lean toward keeping gifts from crossing; our article on funding long-term care covers the choices. And a legacy number, if the household has one, tells the plan what is already set aside for after death, so the gifts in between can be made with confidence. The plan’s risk setting is the other legacy lever: in a plan that adjusts, a more cautious starting point mostly trades giving and spending now for more left later.
Not yet, or not that much. Sometimes the plan says wait. The household’s own plan may not be solid enough, the cost of care late in life may still be an open question, or the person receiving the gift may not be ready for it. Those are reasons to change the amount, the timing, or the form, not reasons to stop giving. A child who is not ready for a lump sum may be well served by bills paid directly, a gift spread over several years, a trust, or time and mentorship while the money waits. Many households have the opposite problem: they could give, and spend on themselves, far more than they do, the pattern our article on why retirees underspend explores.
The 2026 Gift Tax Rules in Plain Terms
Most families will never pay a dollar of gift tax, and many never need to file a gift tax return. These are the rules that matter.
The annual exclusion. In 2026 each person can give up to $19,000 to any other person without using any lifetime exemption and without filing a return, as long as the recipient can use the gift now. (A gift the recipient cannot use until later, such as a gift to a trust that gives the beneficiary no current right to withdraw it, is a future interest: it gets no annual exclusion and needs a gift tax return at any size.) There is no limit on the number of recipients. A married couple can give $38,000 to each child, and $76,000 a year to a married child and that child’s spouse together. Gifts to a spouse who is a U.S. citizen are unlimited.
Texas couples and community property. In Texas and the other community property states, a gift of community property is treated as made half by each spouse. A Texas couple who writes a $38,000 check to a daughter from community funds has made two $19,000 gifts, and neither spouse needs to file. In a common-law state, a couple can reach the same result with a check from each spouse. A single larger check from one spouse can also be treated as given half by each, but only by filing a gift tax return that elects to split the gift.
Above the exclusion. Gifts to one person that total more than $19,000 in a year are reported on a gift tax return, Form 709, due April 15 of the following year, the same day as the giver’s income tax return, and an extension of the income tax return extends it as well. Reporting is not paying. The excess reduces the giver’s lifetime exemption, $15,000,000 per person in 2026, and gift tax, at 40%, is owed only once lifetime taxable gifts pass that amount. Because the exemption is unified, whatever is used during life is not available at death, which matters mainly to families whose estates may exceed it, through growth or a future change in the law; our article on the $15 million estate tax exemption explains who that still includes. Business owners whose estates may reach it face a different set of choices, such as gifting shares before a sale, which our article on estate planning before a business sale covers.
Tuition and medical bills. Tuition paid directly to a school, and medical care paid directly to the provider, including health insurance premiums, are not gifts at all for gift tax purposes. A grandparent can pay a grandchild’s full tuition bill and still give the same grandchild $19,000 that year. The exclusion covers tuition only, not room, board, or books, and it requires paying the school or provider directly rather than reimbursing the family.
Accounts for children and grandchildren. A contribution to a 529 plan can be treated as made evenly over five years, so one person can put $95,000 into a grandchild’s account at once and a couple $190,000. The election is made on a gift tax return, Form 709 (each spouse files one), and it uses five years of annual exclusions for that grandchild; our article on grandparent 529 plans covers the election and the new financial aid rules. For a child under 18, the new Trump Accounts can take up to $5,000 a year from family and others.
Which Asset Makes the Better Gift
The gift tax is rarely the expensive part of a gift. Income tax is, and it depends on what is given.
The basis rule. A gift carries the giver’s cost basis with it. Property inherited at death generally gets a new basis equal to its value at death, the step-up, which erases the gain built up during the owner’s life. Give a child shares worth $50,000 that cost $10,000 and the child holds them at $10,000; leave the same shares at death and the child holds them at their value then, with no gain to pay. For families well under the exemption ($15 million per person, $30 million for a married couple), we lean toward holding appreciated assets for the step-up and giving cash or assets with little gain during life, because that usually beats a lifetime gift of low-basis assets. The exception is when holding is itself the risk, such as a concentrated position, a property the survivor cannot manage, or a need for cash during a long illness, and we model both paths rather than applying the rule. Our article on the step-up in basis covers how it works, including the full step-up Texas couples get on community property at the first death.
A child in the 0% bracket. The basis rule has a useful exception. Long-term gains are taxed at 0% for a married couple whose taxable income, gains included, stays at or below $98,900 in 2026. A child whose household is well inside that line can sell gifted shares and pay no federal tax on the part of the gain that fits under it, and the giver’s holding period carries over to the child, so a gift of appreciated shares to that child can give up little or nothing (a child in a state with an income tax may still owe state tax on the sale). The kiddie tax blocks this for younger children: investment income above a modest amount is taxed at the parents’ rates for children under 18, and for children who are 18, or full-time students under 24, whose earned income is not more than half of their own support. For adult children, the added income can affect financial aid and other income-tested benefits, so it is worth modeling first, as our article on the 0% capital gains bracket explains.
Assets with a loss. A gift of something worth less than the giver paid for it wastes the loss, because the recipient cannot claim the giver’s higher basis as a loss. Selling first, claiming the loss, and giving the cash is usually better.
Pre-tax retirement money. Giving from a traditional IRA or 401(k) during life means taking a withdrawal first and paying income tax on it at the giver’s rates (and before 59½, usually a 10% early withdrawal penalty as well), unless the giver is 70½ or older and the gift goes from an IRA to a charity as a qualified charitable distribution, covered below. Left at death, the same account is taxed at the heir’s rates instead. Which is cheaper depends on whose rates are lower, the question the next section takes up. Roth money has no such cost, since a qualified Roth withdrawal is tax-free. Which account a household spends, gives, or leaves to heirs, Roth or traditional, turns on whose tax rates are higher, a trade-off our article on Roth conversion planning after OBBBA weighs.
Equal, Fair, and Tax-Aware
How to divide gifts and an estate among children is the family’s decision, and we do not tell clients how to make it. Some parents split everything evenly on principle. Others give more to the child who needs more, or to the one who gave up years of work to care for a parent. What we bring to the conversation is the tax effect of each choice, because two children who receive the same amount can end up keeping very different amounts.
Consider a hypothetical family with two married children. One is a teacher whose household earns about $80,000. The other is a physician whose household earns about $500,000 and expects that to keep rising for years. The parents own, among other things, a $1,000,000 traditional IRA and a $1,000,000 brokerage account that will get a step-up at their deaths.
Suppose the teacher’s household inherits the IRA and takes it out in equal withdrawals of $100,000 a year over ten years. On 2026 federal rates, with their income unchanged, the withdrawals cost about $16,700 a year in tax, $167,000 in all. The physician’s household, taking the same withdrawals on top of its income, would owe $336,605, about twice as much, at 32% and 35%. The brokerage account, stepped up at death, carries no income tax for either of them if it is sold soon after.
The same $1,000,000 IRA costs one heir about twice the tax of the other
Teacher’s household, about $80,000 of income
Physician’s household, about $500,000 of income
That difference is a planning choice. If the parents split each account in half, the two households together would pay $221,605 in tax on the IRA. If the IRA goes to the teacher’s household and the brokerage account to the physician’s, the family pays $167,000, keeping $54,605 more in the family. The same idea runs through lifetime gifts. The teacher’s household, with taxable income of about $47,800, has room for about $51,100 of gains at the 0% rate, so appreciated shares can make a good gift to them. The physician’s household would pay 18.8% on the same gain (15% plus the 3.8% net investment income tax), so low-basis shares meant for that child are usually better held for the step-up.
The arithmetic also shows why equal is not the same as fair. Split evenly, account by account, the teacher’s household would keep $940,000 after tax and the physician’s $838,395. Under the tax-aware split, the teacher’s household keeps $833,000 of its $1,000,000 inheritance after tax and the physician’s household keeps $1,000,000. Some parents are comfortable with that; others leave the teacher’s household a larger share, or give it more during life, to even out what each child keeps. Lifetime gifts raise the same question: when one child received help with a house and another did not, a will can say whether that help counts against the first child’s share, and a simple record of significant gifts makes that possible. The figures here are an illustration on 2026 federal brackets held constant, with no growth in the account and no state tax; because the physician’s income is expected to rise, the real gap is likely larger. Each family’s numbers deserve their own model.
Helping With a Home: Gift, Loan, or Both
Help with a home is one of the larger gifts many parents consider, and it raises a familiar question: should it be a gift, a loan, or something in between? We lean toward laying out all three, with the tax treatment of each and the trade between simplicity and complexity, and letting the family choose.
An outright gift. The simplest path. Two parents can give a married child and spouse $76,000 in a year with no return to file; a larger gift is reported on Form 709 and uses some of the lifetime exemption, which under current law costs most families nothing in tax, because few estates will come near $15 million per person. Lenders usually ask for a signed letter confirming that money toward a down payment is a gift, not a loan. The trade-off is that a gift is final: if the parents’ plans change, or the marriage does, the money does not come back.
A real loan. Parents can lend instead, and a family loan holds up as a loan when it is written and run like one, with a signed note and a repayment schedule the parents would enforce, and it avoids imputed interest when it charges at least the applicable federal rate the IRS publishes each month for the loan’s term. For a loan longer than nine years made in November 2026, that rate is 5.45% compounded semiannually, the basis the tax code uses for these loans, which the IRS also publishes as 5.52% compounded annually and 5.39% compounded monthly. Lending for less generally turns the forgone interest into a gift (for a term loan, the present value of all of it, counted in the year the loan is made) and can leave the parents owing income tax each year on interest they never received, apart from an exception for loans totaling $10,000 or less and a cap, for loans totaling $100,000 or less, that limits the imputed interest to the child’s net investment income. The child pays real interest, the parents report it as income, and if the note is secured by the home and recorded, the child can deduct the interest as mortgage interest when itemizing. A loan keeps flexibility: the parents can be repaid if they need the money, and an unpaid balance at death is an asset of the estate that the will can forgive or count against that child’s share.
A loan with yearly gifts. This is a well-known structure, and one we have helped clients set up. The child and spouse buy the home with the parents’ loan and both sign the note, and each year the parents make annual-exclusion gifts that the couple uses for the payments, or forgive a year’s payments outright. Consider parents who lend a married child and spouse $400,000 over 30 years with monthly payments at 5.39%, the November 2026 long-term rate for monthly compounding. The payments come to about $26,900 a year, of which about $21,400 is interest in the first year, reported as income by the parents. Paying with gifted cash keeps the interest deductible for the couple if they itemize, since interest the parents forgive is never paid and so cannot be deducted. Forgiving the interest also may not take it out of the parents’ income, one more reason the cash-gift route is usually cleaner, and a point to settle with the family’s CPA. With $76,000 a year of annual exclusion room across the child and spouse, the parents can cover the payments with gifts to both, or forgive more when both are borrowers on the note, without filing a gift tax return, and they can stop if their own plan needs the money. Forgiving a note that only the child signed is a gift to the child alone, which caps it at the $38,000 of exclusions the two parents have for that child. Those gifts use the year’s exclusions for the child and spouse, so other large gifts to them that year would be reportable.
Two cautions. First, the gifts have to be decisions made each year. If the parents intend from the start to forgive the whole loan, the IRS can treat the full amount as a gift on the day the money changes hands (it has taken that position since Revenue Ruling 77-299), so the note should be one the parents could and would enforce. Second, the structure moves help toward the home a year at a time inside the annual exclusions, so it does not draw down the parents’ lifetime exemption, which is the purpose the structure is known for. Under current law, using some exemption costs most families no tax, so for them the structure also earns its place through flexibility and through keeping things even among children; for estates that may reach the exemption, it also lets the home’s growth build outside the parents’ estate. In Texas there is a further question for the family’s attorney. Property a person receives by gift is generally that person’s separate property, while a home a married couple buys during the marriage is presumed to be community property. Whether the help is a gift to the child, a gift to the couple, or a loan can matter if the marriage ends. A loan of this kind is worth papering with an attorney.
Giving to Church and Causes While Living
For us, generosity starts from conviction before it reaches the tax return. We believe we are called to be generous, and to give in a way that is not meant to be seen, in the spirit of the teaching that the left hand should not know what the right hand is doing (Matthew 6:3). Galatians 6:10 puts the practice simply: “as we have opportunity, let us do good to everyone” (ESV). So we encourage clients, without pushing, to look for opportunities to be generous now, as well as through the estate plan. Clients come to giving from many directions, and the plan serves whatever moves them.
The 2026 rules then decide which dollars, and which method, cost the least.
Cash to the charity. Starting in 2026, households that take the standard deduction can also deduct up to $1,000 (single) or $2,000 (married filing jointly) of cash given directly to qualifying charities, including a church or other house of worship. The gift has to be cash, and it cannot go to a donor-advised fund.
Itemizing and bunching. For households that itemize, charitable gifts are now deductible only above 0.5% of adjusted gross income, and households in the 37% bracket save at most 35 cents per dollar deducted. Giving several years’ worth at once, often through a donor-advised fund that then makes grants over time, clears that floor once instead of every year and can lift a household above the standard deduction in the year it gives. A donor-advised fund can also make grants anonymously, which suits giving that is not meant to be seen. Our article on donor-advised funds and bunching covers the mechanics.
Appreciated shares. Long-held shares given to a charity or a donor-advised fund are generally deductible at their full value for a household that itemizes, up to 30% of adjusted gross income in a year with any excess carried forward for up to five years, and the gain is never taxed, which makes them a better gift than cash for that household.
From an IRA at 70½. A qualified charitable distribution sends money from an IRA straight to a charity, up to $111,000 per person in 2026. It is left out of income entirely, counts toward required distributions once they begin, and keeps adjusted gross income lower, which can protect the $6,000 senior deduction (it phases out between $150,000 and $250,000 of modified adjusted gross income on a joint return, through 2028) and hold down Medicare premiums. It cannot go to a donor-advised fund. Our article on qualified charitable distributions covers the rules and paperwork, and our article on the senior deduction covers its phaseout.
What belongs in the estate plan. Some gifts are better made after death. A pre-tax retirement account left to a charity owes no income tax on the balance, so for a household that plans to give at death, naming a charity on part of an IRA and leaving other assets to family often saves the most.
How We Think About It
We lean toward giving that is intentional rather than incidental, and toward encouraging giving at every stage of life without pushing it. The conversation starts with two questions: would you like to take part in this gift, and when would it be most valuable to the people receiving it? It starts with the household’s own reflection, and for couples with each other; we help turn that thinking into a plan; and when it fits, it widens to the children or others the household may give to. Underneath are the questions of when, why, and to whom, both now and after the household is gone. We do not tell clients how to divide among their children. We show what each choice does.
In the plan, regular giving can be core spending and larger gifts adaptive, sized against risk-based guardrails the way the rest of retirement spending is, with any long-term care reserve and legacy number named as their own lines. A one-time gift is modeled before it is made, so the household can see what it does to next year’s spending and to the portfolio value that would bring a cut. Then come the mechanics. Annual exclusions are mapped across children, their spouses, and grandchildren (from two parents, $76,000 a year to a married child and spouse), and tuition and medical bills are paid directly. Cash and high-basis assets are usually the ones given during life, low-basis assets are usually held for the step-up, and appreciated shares can go to adult family members in the 0% bracket when the modeling supports it. We show what each heir’s share would cost in tax, so a family that wants to can point pre-tax dollars toward the heirs in the lowest brackets and toward charity. When a loan fits better than a gift, it is written as a real loan, with an attorney, and from 70½, qualified charitable distributions are often the first tool for giving to church and causes.
We lean this way because the timing argues for it. An inheritance that arrives at about 60 usually misses the years when help matters most, and a gift during life lets the giver take part in it. Planning the gift guards against the opposite mistake, giving away money the household will need, and the tax rules reward a gift made with the right asset to the right person.
The trade-offs are real. A gift is permanent, and the cost of care late in life is hard to know in advance. A child may not be ready, which changes the form of the gift more than the decision to give. Low-basis assets given during life give up the step-up. And for most families the gift tax itself is a paperwork question rather than a tax one, so we lean toward choosing a loan structure for what it does for the family, such as flexibility and fairness among children, and not for the filing alone. Holding back is a fine answer when it is a decision rather than a default. Our primary job is to help clients articulate what is important to them in life and use their money for it efficiently and effectively, and for many of them that includes being generous while they can see it.
Common Questions
Is it better to give to your children now or leave an inheritance?
Often some of both. For a married couple who are both 65 today, our calculation from Social Security life tables puts the second death at about 90 at the median, so children born when the couple was 30 would typically inherit at about 60, usually after the years when help with a home, child care, or college matters most. A gift during life arrives when it can do more, and the giver gets to take part. We lean toward encouraging giving at every stage, without pushing it, with the amount and the form (money, time, or mentorship) shaped by the household’s own plan and larger gifts of money waiting until the givers’ own retirement is secure. For families well under the exemption ($15 million per person, $30 million for a married couple), we lean toward giving cash or high-basis assets during life and usually holding low-basis assets for the step-up at death.
How much can parents give a child in 2026 without paying gift tax?
For nearly every family, the gift tax sets no practical limit. Each parent can give $19,000 to each child in 2026 with nothing to file, so a couple can give $38,000 to a child, or $76,000 to a married child and spouse. Tuition paid directly to a school and medical bills paid directly to the provider do not count at all. Larger gifts are reported on Form 709 and reduce the giver’s $15,000,000 lifetime exemption, and gift tax of 40% is owed only once lifetime taxable gifts pass that amount. In Texas, a gift of community property counts as half from each spouse.
Can parents lend a child money for a house and forgive the payments?
Yes, if the loan is a real one. The note should be written and signed, carry interest at least equal to the IRS applicable federal rate for its term (for a loan longer than nine years made in November 2026, 5.45% compounded semiannually, or 5.39% for a note that compounds monthly; the rate resets each month), follow a payment schedule, and ideally be secured by the home and recorded. Each year the parents can make annual-exclusion gifts that the couple uses for the payments, or forgive that year’s payments, up to $76,000 a year for two parents giving to a married child and spouse who both signed the note, without a gift tax return. If the plan from the start is to forgive the whole loan, the IRS can treat the full amount as a gift up front. The parents report the interest as income, and how any forgiven interest is reported is worth confirming with the family’s CPA.
Should we give to church and charity now or through the estate plan?
Often both, with each dollar matched to where it costs the least. During life, a qualified charitable distribution from an IRA (from 70½, up to $111,000 per person in 2026) never enters income, and households that itemize generally do best giving long-held appreciated shares, often bunched through a donor-advised fund. At death, a pre-tax retirement account left to a charity owes no income tax on the balance, so naming a charity on part of an IRA and leaving other assets to family often saves the most. We encourage clients to look for opportunities to be generous now, and we match the method to the household’s tax picture each year.