The Power of Giving: Why Gifting During Life is Better Than Waiting Until Death

The concept of giving with a "warm hand" (while alive) versus a "cold hand" (after death) is rooted in several practical and emotional benefits that make gifting during life more advantageous for both the giver and the recipient (often times between a parent and a child). Here are a few key reasons why giving while alive is often considered better:

Giving while alive allows you to witness the immediate impact and enjoy the emotional rewards.

Emotional Reward: When you give with a warm hand, you have the chance to see the positive impact of your gift. Whether it’s helping a family member buy a home, pay for education, or start a business, you experience the joy and satisfaction of watching them benefit in real-time.
Guidance and Influence: While alive, you can guide your heirs on how to use the inheritance wisely, sharing your values and vision for wealth stewardship, which creates stronger financial habits and legacy building.

Making gifts during your lifetime can provide significant tax advantages and reduce estate taxes.

Gift Tax Exemptions: There are annual gift tax exclusions, which allow you to transfer wealth each year without triggering taxes. In 2024, for instance, you can gift up to $18,000 per recipient annually without needing to file a gift tax return ($36,000 if two parents are giving to a single child). This can reduce the size of your estate and the potential estate taxes due upon your passing.
Reduced Estate Taxes: By gifting assets during your lifetime, you may reduce the size of your taxable estate, potentially lowering estate tax liabilities when you pass away.
Advanced Planning Tools: Other strategies, like creating trusts or family partnerships, can help facilitate tax-efficient transfers while you’re alive, minimizing the impact of gift and estate taxes down the road.

Gifting during life offers more flexibility and control over how and when to transfer wealth.

Strategic Gifting: You have control over when and how much to give, allowing you to adjust the timing of gifts based on your and your heirs’ needs, or to respond to changes in tax law.
Balance Between Giving and Retaining Assets: You can maintain financial security for yourself while slowly distributing wealth. This provides flexibility to give when you’re confident you have enough for your own needs.

Lifetime gifting helps strengthen family relationships and fosters better communication around money.

Creating Family Bonds: Gifting during life can open up meaningful conversations about values, goals, and family traditions. It fosters stronger connections and aligns expectations, which might reduce potential conflict after you pass.
Avoiding Probate Delays: Inheriting assets through a will can be a long and drawn-out process with potential family disputes. Lifetime gifting is more straightforward, ensuring your intentions are clear.

Providing financial support while alive allows you to address your heirs’ needs at critical moments.

Assistance in Critical Moments: Many heirs could benefit more from receiving financial support during their early or middle stages of life, when they are making significant investments (buying homes, funding education, etc.), rather than waiting until later years when they may not need the funds as much.
Health Considerations: If your beneficiaries face health challenges or financial difficulties, helping them now can provide immediate relief and security when it’s most needed.

Gradual gifting reduces the risk of overwhelming your heirs with sudden wealth after your death.

Gradual Transition of Wealth: Gifting with a warm hand allows your heirs to adjust to receiving wealth incrementally, reducing the risk of sudden inheritance mismanagement that often happens when large sums are left all at once.

By giving while alive, you make wealth transfer a more personal, strategic, and rewarding process for both you and your heirs. It provides a level of intentionality that is often lacking in posthumous bequests, which can sometimes feel impersonal or detached. I encourage writing a heartful and thoughtful letter when giving any substantial gift. This letter has the opportunity to reflect love, gratitude, and a sense of legacy.

Thanks for reading!