Giving While You're Alive to Watch It

Most wealth passes at death, when heirs are in their sixties and need it least. There is a strong case, and some surprisingly generous tax rules, for giving while you are here to see what it does. Part six of Both Ends of the Table.

Read the full article: https://news.americanretirementadvisors.com/giving-children-inheritance-while-alive/

American Retirement Advisors helps families in Arizona and Nevada navigate healthcare, retirement income, and inheritance planning. Want to reach out? Text us at (602) 281-3898, email support@americanretire.com, or visit https://americanretirementadvisors.com.

Transcript

SPEAKER_00 0:01

Welcome to the American Retirement Advisor, coming to you from One to Three Z Studios. Real stories, real strategies, and straight talk about healthcare, retirement income, and inheritance planning. I'm Ian Schaefer, joined with Eddie and Betty. Let's get into it.

SPEAKER_07 0:16

Welcome back to the American Retirement Advisor. I'm Betty, here as always, with Eddie, and today we get to the one I've been looking forward to all series. This is part six of both ends of the table, and if I'm honest, it might be the warmest thing we've talked about yet. It's about giving while you're still here to watch it happen.

SPEAKER_02 0:38

It's my favorite one too. Ian Schaefer wrote this whole series, and he says right at the top that this is the part he loves most.

SPEAKER_03 0:46

We've spent the last five episodes on documents, conversations, taxes, coordination. All of it's serious, all of it important. And a little heavy at times. Little heavy. And this one is just joyful. It's about giving with a warm hand instead of a cold one. Giving while you can see what the money actually does for the people you love.

SPEAKER_07 1:09

So let's start with the thing in the article that honestly stopped me. He points out that most family wealth changes hands at death, most of it. And so by the time a lot of people actually receive an inheritance, they're already in their 60s themselves.

SPEAKER_02 1:25

Right. They're comfortable by then, settled. The house is paid off, the kids are raised, and the money lands at a moment when, frankly, it's past the years when it would have changed their lives.

SPEAKER_07 1:37

That's the part that got me. Because when you're in your 60s and a check arrives, it's nice, but it's not the same as when you were 35 and drowning.

SPEAKER_03 1:46

Exactly. Think about what 35 looks like for a lot of people. You've got young kids, you've got a mortgage you're stretching to cover, daycare costs that feel insane. That's the moment a little help completely changes the trajectory of a life.

SPEAKER_07 2:02

And the article says that's exactly what advisors are hearing now. More and more families are realizing they'd rather give some of it sooner.

SPEAKER_03 2:09

With a warm hand instead of a cold one, while they can watch it land. And I want to be careful here because Ian is careful about it. This is not about giving away what you need.

SPEAKER_07 2:19

That's a big one, and we'll come back to it.

SPEAKER_03 2:21

We will, more than once. It's about giving sooner what you already know you're going to give eventually. You've earmarked it for the kids in your head anyway. The question is just timing.

SPEAKER_07 2:31

So the question the whole article is built around is one I think a lot of people quietly wonder about. Should I give my children some of their inheritance now instead of later?

SPEAKER_03 2:41

And for families who have more than enough, the article makes a strong case for yes. Three reasons really. The help arrives at the moment it matters most. You actually get to see the good it does. And the tax rules make it remarkably easy, often with no tax and no paperwork at all.

SPEAKER_07 3:00

Let's take those one at a time because I don't want to rush past them. Start with that phrase you keep saying: the warm hand versus the cold hand.

SPEAKER_03 3:07

It's an old phrase among families who think about this well. Give with a warm hand, not a cold one. And the difference is everything that comes along with the gift.

SPEAKER_07 3:19

Meaning a gift you give while you're alive comes with you attached to it.

SPEAKER_03 3:24

Your voice, your guidance, your presence. You can explain what you hope it does. You can sit down with a child and help them think it through. You can see the relief on their face when the pressure lifts.

SPEAKER_07 3:37

And a gift that only arrives after you're gone lands silently.

SPEAKER_03 3:42

No chance for any of that. No conversation, no guidance, no watching. And here's the thing the article points out that I keep turning over. The same dollars given 15 years earlier often do far more good and mean far more.

SPEAKER_07 3:59

Same money, different moment, completely different meaning.

SPEAKER_03 4:03

That's it, exactly. The dollar amount on the check doesn't change. When it shows up changes everything about what it does.

SPEAKER_07 4:12

Okay, the second reason is the one I think is the heart of it. You actually get to watch it. And the article has these little pictures in it that I just loved.

SPEAKER_03 4:20

They're so good. Helping a grandchild walk across a graduation stage with no student debt. Just imagine being in the audience knowing you took that weight off their shoulders before they ever started.

SPEAKER_07 4:34

Or watching a daughter buy her first home a decade sooner than she could have on her own.

SPEAKER_03 4:39

A decade? Think about what a decade of not renting, of building equity, of having roots does for a person's whole life.

SPEAKER_07 4:47

And then the one that got me most taking the whole family somewhere together while everyone's still healthy enough to enjoy it.

SPEAKER_03 4:55

That window doesn't stay open forever. And Ian's point is that these are the things money is genuinely for. Giving while you're alive is the only way you ever get to actually see them happen.

SPEAKER_07 5:06

No account statement can show you that.

SPEAKER_03 5:09

No statement can capture a grandchild crossing a stage. And here's the line that I think will land for a lot of our listeners. For people who have spent a lifetime being responsible with money, careful, disciplined, this can be the most rewarding thing they ever do with it.

SPEAKER_07 5:25

After a whole life of being the careful one, of saying, not yet, and we'll see, getting to be the one who says yes and then watching it land, that's a gift to yourself, too.

SPEAKER_03 5:36

It really is. The watching is part of the reward.

SPEAKER_07 5:39

All right, now the practical side, because this is where I think people assume it's complicated. And the article says it's the opposite.

SPEAKER_03 5:46

The tax code is actually pretty generous here. Surprisingly generous. So the headline number, in 2026, you can give up to $19,000 per person each year with no gift tax and no filing.

SPEAKER_05 6:01

Per person meaning per person you give to.

SPEAKER_03 6:04

Per recipient. So you can give $19,000 to one child, $19,000 to another, $19,000 to a grandchild, to as many people as you like. And here's the part I didn't realize: each spouse has their own limit. Each spouse has their own, so a couple can give $38,000 to the same person, 19 plus 19, no tax, no paperwork, to as many people as you want. That adds up faster than people think. It really does. But here's the tool the article says almost nobody knows about, and it's the one I'd want people to write down. This is the tuition and medical one. If you pay someone's tuition or their medical bills by writing the check directly to the school or directly to the provider, that gift is completely unlimited. It does not count against any of your other limits.

SPEAKER_05 6:55

Wait, unlimited. So that's separate from the 19,000?

SPEAKER_03 7:00

Totally separate. You could give your grandchild the $19,000 and also pay their college tuition directly to the university, and the tuition piece has no cap at all, no gift tax on it. And the same for a hospital bill? Pay a family member's hospital bill directly to the hospital, same thing. Unlimited, no gift tax. The article says for families helping with education or health, that one rule can move a great deal of money, tax-free, every single year.

SPEAKER_07 7:29

Now there's a catch in how you do it, right? Because I can already hear someone thinking, I'll just hand my grandkid the cash for tuition.

SPEAKER_03 7:37

That's the key, and the article is really clear on it. The payment has to go straight to the institution, to the school, to the provider, not to the person.

SPEAKER_07 7:46

So you don't give the grandchild the money for the tuition. You write the check to the university.

SPEAKER_01 7:54

If it goes to the student first, you've lost the special treatment. The check goes straight to the school or straight to the hospital. That's the rule.

SPEAKER_03 8:01

And that's a small detail that makes a huge difference. It's the whole thing. And I'll be honest, when you get into the exact mechanics of how you document that or how a bigger gift interacts with the lifetime exemption, that's where I'd stop guessing.

SPEAKER_07 8:16

The article does mention a lifetime exemption.

SPEAKER_03 8:18

It does. It says larger gifts generally just count against your lifetime exemption, which sits at a historically high level today, rather than creating an immediate tax for most families. But it also notes that exemption could change with future legislation. So that's not a forever number. It's not. And the precise figure, how it applies to your situation, what happens if the law changes, that is exactly the kind of thing I'd write down and ask the team at American Retirement Advisors. They know the specifics. I'd rather point you to them than have you act on a number I half remembered.

SPEAKER_07 8:55

I love that. And I think that's the honest thing to do. These rules move, and your situation is yours.

SPEAKER_03 9:01

That's right. The general shape is in the article. The exact application to your family is a conversation with an advisor.

SPEAKER_07 9:08

Okay, now I want to get to the worry because the article doesn't dodge it. The honest fear underneath all of this is that money given too easily can do damage.

SPEAKER_03 9:17

And Ian says straight out, that concern is valid. It's real. We've all seen or heard of a situation where money showed up and didn't help, it hurt.

SPEAKER_04 9:27

So what's the answer? Because I think the instinct is, well, that's why you wait until death.

SPEAKER_03 9:33

And the article says, no, that's not the answer. The answer isn't to wait. The answer is to give with intention. Give with intention.

SPEAKER_04 9:40

Unpack that.

SPEAKER_03 9:41

Tie the gift to something that builds a life rather than replaces the effort of building one. Education, a first home, a business, a safety net. Things that lift someone up toward their own life, not things that just cover for never having one.

SPEAKER_07 9:55

There's a real difference between here's help getting your business off the ground and here's money so you never have to work. Night and day.

SPEAKER_03 10:03

One builds, one replaces. And the second piece is the conversation. The article ties it right back to where this whole series started in episode one. Talk about the gift. So a gift comes with understanding, not just a number. Money given thoughtfully with a conversation around it tends to help. Money dropped without any context, and the article says at any age, tends not to. It's not really about how old the person is.

SPEAKER_07 10:28

That surprised me a little. We assume the danger is giving young, but the article says the timing matters less than the intention behind it.

SPEAKER_03 10:36

That's the reframe. A thoughtless gift to a 50-year-old can do just as little good as a thoughtless gift to a 25-year-old. It's the intention and the conversation that make it land, not the birthday.

SPEAKER_07 10:48

And then there's the line you promised we'd come back to.

SPEAKER_03 10:53

None of this happens until your own security is fully and permanently handled. You give from your surplus, never from your safety.

SPEAKER_07 11:02

Say that one again because I want everyone listening to hear it.

SPEAKER_03 11:05

You give from your surplus, never from your safety. Every wonderful thing in this episode, the warm hand, watching the graduation, the tax-free tuition, all of it only makes sense after your own retirement is secure for the rest of your life.

SPEAKER_07 11:22

Because the worst outcome isn't giving too little, it's giving generously and then needing it back.

SPEAKER_03 11:29

And that's a terrible position to put your kids in. So secure yourself first, fully and permanently, and then give from what's genuinely extra. That order is not optional.

SPEAKER_07 11:41

Which is exactly why this is a planning conversation and not a kitchen table guess. You actually have to know what your surplus is.

SPEAKER_03 11:49

You have to know your number cold before you can know what's truly extra. That's the work an advisor does with you first before a dollar goes anywhere.

SPEAKER_07 11:58

Now the title, both ends of the table. This is the episode where it really clicks for me. Tell people what it means.

SPEAKER_03 12:06

It's the warmest expression of the whole idea. What arrives at your end of the table from your parents doesn't have to just sit there and wait.

SPEAKER_07 12:15

Some of it can flow on to the next end now.

SPEAKER_03 12:18

While you're still here to guide it and enjoy it, so receiving and giving stop being two separate events decades apart. They become one continuous living thing.

SPEAKER_08 12:29

You're sitting at both ends of the table at the same time.

SPEAKER_03 12:32

At once, and on purpose. That's the whole picture.

SPEAKER_08 12:42

I think that reframes inheritance from this far-off, somber after I'm gone thing into something alive and happening right now.

SPEAKER_03 12:51

Something you participate in, something you get to watch, and going back to where we started, it solves that sad fact that so much of this money usually shows up when people are already in their 60s.

SPEAKER_06 13:02

Because you're moving it down the table while it can still change a young life.

SPEAKER_03 13:06

Right when it matters most. That's the move.

SPEAKER_06 13:08

Before we close, let me just gather the practical pieces for anyone taking notes. The annual number?

SPEAKER_03 13:14

In 2026, up to $19,000 per recipient per year. No tax and no filing. $38,000 from a couple to the same person because each spouse has their own exclusion.

SPEAKER_06 13:25

The unlimited one?

SPEAKER_03 13:27

Tuition and medical, paid directly to the school or directly to the provider. Unlimited doesn't count against your other limits. Just remember the check goes straight to the institution, never to the person.

SPEAKER_06 13:38

And anything bigger than that?

SPEAKER_03 13:40

Generally counts against your lifetime exemption, which is high today but could change with future legislation. And for the exact way that applies to you, that's a conversation with an advisor, not a guess from us.

SPEAKER_07 13:52

And the golden rule under all of it?

SPEAKER_03 13:55

Your own security comes first, fully and permanently. Give from surplus, never from safety. And give with intention tied to building a life with a conversation around it.

SPEAKER_07 14:08

That's it. And here's where I'll leave you. If part of you has been thinking, I'd love to help while I'm still here to see it, that is one of the most beautiful instincts a person can have. And you don't have to figure out the how all by yourself. Deciding how much, to whom, and when is personal and emotional, and it's got real tax and planning angles underneath it.

SPEAKER_03 14:31

That's exactly what our team works through with families in an inheritance planning meeting. They make sure your own security comes first, that you're giving a structure to help rather than harm, and the beneficiary box keeps all your intentions organized and clear.

SPEAKER_07 14:46

So if you'd like to give while you're here to watch it and do it wisely, sit down with our team at American Retirement Advisors. You can reach them at 602-281-3898.

SPEAKER_03 14:59

And next time, we wrap up both ends of the table with the final part: why the time to build your team is before you need it, not after.

SPEAKER_07 15:08

I can't wait for that one. Thanks for spending this time with us. Go give somebody a warm hand. We'll see you next time on the American Retirement Advisor.

SPEAKER_03 15:17

A quick note before we wrap up. Today's episode covers financial topics for educational purposes only. American Retirement Advisors does not provide tax or legal advice. Please consult a CPA or tax professional before making any decisions based on what you heard today.

SPEAKER_07 15:36

This is Betty with the American Retirement Advisor. Thanks for listening. If this episode helped you think differently about your retirement, share it with someone who needs to hear it. You can read the full article and browse hundreds more at AmericanRetire.com. Wanna reach out? You can text us at 602-281-3898. Or email support at AmericanRetire.com. Be sure to subscribe so you never miss an episode. We publish daily. See you next time.

SPEAKER_00 16:10

Thanks, Eddie. Thanks, Betty. Until next time, this is Ian Schaefer coming to you from 123 Easy Studios. I hope you've enjoyed this recording of the American Retirement Advisor, where we make healthcare, income, and inheritance planning 123 Easy.