The Season for Giving and Gifting Strategies(Or: How Elon Musk Could Avoid Estate Tax With the Help of Santa Claus)

As we head toward the end of the year, a number of clients have been asking:

“How can I help my kids, grandkids, or charities now — and does this fit with my estate plan?”

December is a perfect time to review your gifting options. Below is a practical guide to how gifting works under federal and state law, plus ideas for year-end strategies that can lower future estate taxes and strengthen your long-term planning.

Federal Gifting Basics: What You Can Give Tax-Free

1. Annual Exclusion Gifts

In 2025, you can give up to:

• $19,000 per person without gift tax or a gift-tax return

• $38,000 per person for married couples who elect “gift splitting”

You can make these gifts to as many people as you want — children, grandchildren, family, or friends.

To illustrate the power of this rule:

Imagine Elon Musk decides to eliminate his estate tax problem by giving away his entire net worth — roughly $500 billion — across the planet’s ~8 billion people. Each person would receive about $62.50. Not exactly world-changing for any individual, but it would shrink Elon’s estate to zero.

I’m now picturing Elon hiring Santa Claus to deliver $62.50 to every person on Earth. No tax attorneys, no CPAs. Just Santa and a very overworked sleigh.

The real point: Annual gifts can meaningfully reduce the size of your estate over time - or even in no time.

2. The Lifetime Estate & Gift Tax Exemption

Beyond annual gifts, each person has a lifetime exemption:

• $13.99 million in 2025

• Rising to $15 million in 2026 (under current IRS inflation adjustments)

Gifts above the $19,000 annual exclusion don’t cause gift tax today — they simply use up part of your lifetime exemption. Gift tax is largely a tracking mechanism, not a tax you pay during life except in very rare situations.

State Taxes: Oregon, Washington & California

Gift tax does not exist in:

• Oregon

• Washington

• California

However, estate tax does exist in Oregon and Washington — and their thresholds are dramatically lower than the federal exemption:

• Oregon: $1 million

• Washington: $2 million

• California: No estate tax (the best state to die in, per a prior newsletter)

This is why gifting can be so valuable for Oregon and Washington residents: It directly reduces the estate that will eventually be taxed.

Building a Yearly Gift Program for Children

You don’t need a lawyer to make gifts — just intentionality and consistency.

Here are some popular approaches:

1. Annual Cash Gifts

Give up to $19,000 per child (or $38,000 per couple) each year.Some super organized clients automate this monthly: $1,583 per month.

2. Fund 529 College Savings Plans

529 contributions count as gifts.What’s a better gift than education? You can also “superfund” by contributing five years of annual exclusion gifts all at once.

A lovely message: “Our holiday gift is your education.”(Thank you, Grandmaclaus.)

3. Gift Appreciated Assets

For more advanced planning, consider gifting:

• Stocks or ETFs

• LLC membership interests

• Fractional real estate interests

Just remember: The gift does not carry a stepped-up basis but it can make sense to get further appreciating assets out of the estate. 

Supporting Charities & Donor-Advised Funds (DAFs)

Year-end is the best time to revisit charitable goals.

Direct Charitable Gifts

• May be income-tax deductible

• Donating appreciated stock avoids capital gains taxes

Donor-Advised Funds

A DAF allows you to:

1. Make a single large charitable gift before December 31,

2. Receive an immediate income-tax deduction, and

3. Recommend grants to nonprofits over time.

Think of a DAF as a family philanthropy account — perfect for building charitable traditions around the holidays. (I recently wrote a full newsletter and blog post about DAFs if you’d like more detail.)

Bringing It All Together

A thoughtful gifting strategy can:

• Support children or grandchildren during important life stages

• Reduce future Oregon or Washington estate taxes

• Strengthen your charitable impact

• Build family traditions of generosity

• Make year-end tax planning more intentional and less stressful

And remember:

You don’t need to give large amounts for gifting to be meaningful. Most of our gift strategies start and stop at this level. Small, consistent gifts can make a big difference over time.

If you’re considering adding gifting to your 2025 planning, I’m happy to discuss what approach fits your goals — financially, legally, and personally.

Warm holiday wishes,Tom