The gifting dilemma

Transferring wealth to the next generation can be one of the most meaningful acts a parent or grandparent makes. But it’s rarely a simple decision. Many families struggle with whether to gift during their lifetime or wait until after death, how much to give, and how to prepare heirs to receive and manage wealth responsibly. The emotions, values and questions behind these decisions are just as important as the tax and legal implications.

At the Merrill Center for Family Wealth®, we help families address these challenges with intention. Rather than treating gifting as a binary decision — to gift or not to gift — we guide clients through a thoughtful process that considers purpose, communication, readiness and long-term impact.

Start with purpose, not just tax efficiency

Many families are aware of the tax benefits of lifetime gifting, particularly with the current historically high exemption amount. But starting the conversation with "how much can we give without paying tax?" can overlook a more foundational question: Why are we giving in the first place?

Understanding the purpose of a gift helps families ensure it reflects their values. It might be to provide educational opportunities, support entrepreneurial dreams or give heirs more freedom in career choices. It might be about expressing love, building a legacy or simply seeing the impact of generosity during one's lifetime.

Taking the time to define the family’s purpose and guiding principles for wealth sets the tone for more effective communication and decision-making down the line.

Rethink the gifting spectrum

Families often assume gifting decisions must fall into one of two extremes: gift everything or gift nothing. But most families operate somewhere in between, and the options along that spectrum are more varied and creative than they may initially seem.

Some families make outright gifts with no strings attached. Others prefer to match savings or charitable giving, fund trusts with guidelines or offer interest-free loans for education or a first home. These in-between options allow the rising generation to benefit from family wealth while still fostering independence and accountability. The key is finding a balance that reflects the family’s values and the readiness of each beneficiary. A rigid one-size-fits-all approach often falls short.

Communicate clearly and progressively

Whether a family is choosing to gift now, later, or not at all, communication is essential. When heirs don’t understand the reasoning behind a decision, they may interpret it as a lack of trust or favoritism. That can create tension, resentment and long-lasting rifts.

That’s why we encourage what we call the "dimmer switch" approach to transparency. Instead of sharing everything at once or keeping everything secret, families can gradually increase disclosure over time —based on the maturity, interest and needs of the next generation.

Conversations can begin with values and goals, then gradually include more specific information about financial structures, intentions and responsibilities. The goal is to make communication an ongoing process, not a one-time event.

Assess readiness and test assumptions

Another essential part of intentional gifting is gauging the rising generation’s readiness. Age isn’t the only indicator. Emotional maturity, financial literacy and personal goals matter too. So do family dynamics, trust structures and legal obligations.

To gain clarity, some families start with "safe-to-fail experiments" — modest gifts or collaborative investment or philanthropy projects that allow younger family members to gain experience and demonstrate responsibility. These trials also give parents and advisors insight into what additional learning or support may be needed before transferring more significant assets.

Make it a shared journey

In many families, gifting decisions are made in isolation — with wealth creators working through them privately and revealing the plan later. But bringing beneficiaries into the conversation early, especially adult children, can foster trust and clarity on both sides.

Family meetings can provide a forum for discussing values, reviewing a draft wealth purpose statement and sharing expectations. When planned thoughtfully, these meetings can also surface assumptions and reveal helpful differences in perspective.

Some families document their intentions in a nonbinding statement of intent or letter of wishes to supplement the legal documents that govern trusts and estate plans. These letters can convey personal stories, values and hopes for the future that help beneficiaries understand the "why" behind the plan.

These stories underscore that there is no one "right" way to approach gifting. Each family must define the path that aligns with its values, goals and unique circumstances.

Looking ahead

Intentional gifting isn’t about maximizing the size of a transfer. It’s about maximizing its meaning and effectiveness. By combining clear purpose, open communication, thoughtful pacing and ongoing reflection, families can make gifting decisions that support not just financial goals, but personal and relational ones, too.

To explore these ideas in greater depth and begin shaping a gifting strategy for your family, read the full whitepaper. Then connect with your Merrill Private Wealth Advisor to discuss further and to access other resources tailored to the rising generation.