Giving With Intention: A Guide to Gifting Money (& More) to Children

Nov 18 2025 | Back to Blog List

Giving to one’s children or grandchildren is one of the great pleasures of wealth. Many of our clients say these gifts are among the most fulfilling financial decisions they ever make, often creating some of the most joyful moments in their lives.

It is one of the greatest honors of our work at Cedar Point Capital Partners to help families plan their gifts—not only for tax efficiency, but to help ensure the way you give reflects your values.

We believe that gifting is part strategy, part stewardship, and part storytelling; each choice becomes a message to the next generation about what matters most.

Today’s families have a wide range of opportunities to transfer wealth in ways that can be tax-efficient, flexible, and deeply meaningful. Federal lifetime exemptions remain historically high, while Iowa’s tax framework is uniquely favorable for residents, with no state-level estate tax, gift tax, or inheritance tax as of 2025. Evolving rules around education planning, Roth conversions, and trust structures offer even more planning opportunities to those who know how to use them.

Below, we explore key considerations for families seeking to make gifts to children or other dependents, including how to structure them wisely, when to give, which assets to consider, and how to ensure your generosity strengthens not just your financial legacy, but the lives and futures of the people you care about most.

Understanding the Annual Gift Tax Exclusion

Nearly every conversation around gifting money to children or dependents revolves around the annual gift tax exclusion amount, which increased to $19,000 per recipient in 2025 and stays there in 2026. This is the amount that an individual can gift to another person each year without filing a gift tax return and without using any of their lifetime exemption—now at $13.99 million per individual in 2025, and set to increase to $15 million per individual in 2026 under OBBBA.

This annual exclusion amount is a deceptively simple number with enormous potential. The rule is wonderfully flexible: nearly any gift of cash or property qualifies as long as it is a “present interest”—meaning the recipient can use or enjoy it immediately. This can include transfers to a child’s investment account, gifts of marketable securities, or even partial interests in real estate or family partnerships.

When structured properly, these gifts can move efficiently out of an individual’s gross estate each year, reducing future estate tax exposure without disrupting your long-term financial plan.

For example, a couple with three children and five grandchildren could gift more than $300,000 in 2025 to their descendants using annual exclusion gifts alone, removing not just the gifted assets but also their future appreciation from the gross estate.

Regular annual exclusion gifts, repeated year after year, can move meaningful wealth across generations with no gift tax and without reducing the lifetime exemption, creating a steady, intentional path toward multigenerational wealth transfer. For many families, this is where structured gifting begins: with simple, consistent transfers that are easy to execute, easy to document, and incredibly effective over time.

529 Plans & Educational Gifting to Children

Many families choose to do their gifting in the form of 529 Plan account contributions, and for good reason. As our own Nick Timm likes to remind clients, 529 Plan contributions count toward the annual gift tax exclusion, and Iowa taxpayers receive a state income tax deduction for contributions to ISave 529 Plans. Even gifts above the deductible amount ($5,800 per beneficiary per Iowa taxpayer in 2025) still qualify as tax-free annual exclusion gifts. It’s a clean, elegant way to give, and a simple tradition to repeat year after year.

Federal law also allows a contributor to front-load up to five years’ worth of annual exclusions into one large 529 Plan contribution using the five-year election. This election allows the gift to be spread evenly over five years for gift-tax purposes, without using lifetime exemption. This “superfunding” strategy is often used by grandparents or parents to jumpstart a child’s college fund in a tax-advantaged way.

Beyond the 529 Plan account, remember that tuition payments can be made directly to an educational institution on behalf of a beneficiary, and do not count against the annual gift exclusion. This offers an avenue for grandparents or parents to pay for a child’s education (tuition only), while preserving exemption space for other financial gifts in the year.

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When the Gift Is More Than Money: Gifting Property to Children

Real estate and farmland carry emotional weight. They tell the story of how your family built something important. Naturally, many families ask whether they should gift these assets now or leave them in the estate.

Yes, you can gift your house to your children. You can gift commercial property or the family farm. But the tax and emotional considerations are rarely simple.

The key question is whether gifting these assets during life enhances your children’s experience—or complicates it. Lifetime gifts of property transfer not just the asset but also:

• your cost basis
• the responsibility of management
• the tax consequences of any future sale

If the asset has appreciated significantly, gifting it during life is often less efficient than allowing it to pass through the estate. The step-up in basis at death can erase large unrealized gains, giving heirs a clean slate. (More on that in a bit.)

For families who want to share ownership or introduce heirs to stewardship earlier in life, there are alternatives:

• LLCs or partnerships that allow gradual transfer without surrendering control
• Irrevocable or dynasty trusts offering asset protection and governance
• Voting and non-voting structures that separate ownership from decision-making

These tools may allow you to begin transferring the experience of ownership without compromising the long-term economics. We can help you navigate the pros and cons of each option, and help make a decision that aligns with your goals.

Give Now, or Leave Assets at Death?

One of the most emotional—and strategic—decisions families face is whether to give during life or pass assets through their estate. The right choice varies, but the conversation always begins with understanding what each approach means for your heirs and your long-term intentions.

Why many families choose to give during life

Lifetime gifts allow children to benefit when help is most impactful: launching a business, building a home, managing young family expenses, or paying for education. Parents appreciate the chance to witness the impact and offer guidance. There is joy in seeing a gift used well. Strategically, lifetime gifts also remove future appreciation from the estate—an important consideration for families nearing federal estate tax thresholds.

But lifetime gifts have drawbacks

Gifting appreciated assets—such as farmland, commercial property, or company stock—passes along your cost basis to the recipient. In practical terms, this means that while the gift may be emotionally meaningful, it may also transfer a larger capital gain burden if the recipient later sells the asset. For families whose wealth lies in real estate or low-basis investments, this can create unintended tax consequences for children or other dependents.

The case for waiting

Passing assets at death, especially appreciated property, offers the advantage of a step-up in basis—essentially allowing your heirs to receive an asset at its fair market value at the time of your death, rather than when you first bought it. For many families, especially in Iowa where farmland and commercial real estate often appreciate significantly across generations, this step-up can eliminate decades of unrealized gains.

Inheritances can also allow for more control and structure, especially when using estate planning tools such as trusts or family entities that guide how assets are managed and used long after you're gone.

For many high-net-worth families, the optimal strategy may blend strategies:

• Use annual exclusion gifts and 529 Plan funding during life.
• Allow highly appreciated assets to pass at death to secure a step-up in basis.
• Use trusts for structure, protection, and long-term guidance.

This approach preserves tax efficiency without sacrificing the joy and immediacy of giving today.

What Gifting Really Requires: Communication and Clarity

Successful gifting to your children and dependents isn’t just measured in tax savings or clever structures; it’s measured in preparedness. Children who understand the intentions behind a gift—why it exists, what it is meant to support, what values it represents—are far better equipped to receive wealth with gratitude rather than entitlement. In many families, the most significant risk is not the tax code, but the communication gap between generations.

A recent study from Fidelity found that while parents feel prepared to leave their wealth, only a quarter believe their children are prepared to inherit it—largely because those important conversations have been delayed or avoided. Families who begin discussing wealth earlier, in age-appropriate ways, consistently report stronger alignment and fewer surprises when it comes to wealth transfers.

For this reason, we see more families embracing structured communication as part of their long-term plan. Some host regular family meetings or annual retreats where parents share the “story” behind the family wealth, articulate expectations, and introduce the basics of the estate plan. Others draft a family mission statement—less about money, more about values—to guide decisions across generations.

These conversations help normalize transparency around finances and allow children to ask questions long before the pressure of an inheritance arrives. When families talk openly, heirs feel more confident, more grounded, and less overwhelmed when the time comes to take on responsibility.

Some families are relying on trusts not only for tax or asset-protection purposes, but as a subtle tool to reinforce maturity, prudence, and long-term thinking. Well-crafted trusts can delay access until children reach an appropriate age, provide distributions tied to milestones, or involve independent trustees who help guide decisions without interfering in family relationships. Far from being restrictive, these structures often give children confidence by providing a framework in which to grow.

As we often remind clients: clarity today prevents conflict tomorrow. When families combine open communication with thoughtful planning, they not only transfer assets—they transfer confidence, purpose, and harmony across generations.

Bringing It All Together

For families in Iowa, today’s environment offers an extraordinary opportunity for intergenerational giving. With no state estate tax, no gift tax, and the full repeal of the inheritance tax as of 2025, wealth transfer planning centers almost entirely on federal rules, many of which remain historically favorable.

This simplicity is a genuine advantage that allows families to design thoughtful, long-range gifting strategies free of the constraints and complexities families in the past may have faced. If you’ve been thinking of giving assets or property to your children or dependents, now may be a great time to do so.

The heart of gifting lies beyond the technical landscape, of course. Whether you are helping a grandchild pursue an education, or thoughtfully transitioning stewardship of a business or farm, these gifts shape the trajectory of the people you love. They communicate values, create stability, and open doors to possibility.

At Cedar Point Capital Partners, we consider it a privilege to walk alongside families during these decisions. Every gift is personal. Every circumstance is unique. And every plan deserves the same blend of financial expertise and human understanding to help ensure your wealth does what you may intend it to do: support, empower, and strengthen the next generation.

Gifting with intention is more than a financial strategy—it is a legacy. And when structured thoughtfully, it becomes one of the most meaningful ways to carry your family’s story forward.

If you’re ready to design your legacy, we’re here to help. Reach out and let’s start the conversation.

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