Strategic Year-End Gifting to

Family and Charity

As the year winds down, it’s easy to get caught up in the holiday rush: the turkey, the tree, the shopping, and the endless to-do lists. But for many families across Minnesota and the country, this season also brings something more profound: the opportunity to give with a purpose.

Whether it’s helping family members get a head start in life or supporting causes close to your heart, strategic year-end gifting can be both emotionally rewarding and financially wise.

At iWealth, we believe generosity and good planning go hand in hand. Thoughtful giving can strengthen family bonds, lower your tax bill, and leave a lasting legacy that reflects your values.

In today’s article, we’ll explore ways to maximize the impact of your gifts this holiday season and why planning them strategically is crucial.

Why Does Giving Feel So Good?

A study from Harvard Business School found that people who spend money on others experience greater happiness than those who spend it on themselves. It’s a fascinating reminder that generosity isn’t just good for those on the receiving end; it’s good for the giver, too.

From a financial perspective, intentional giving can also align with your broader Minnesota retirement or estate planning goals, creating both emotional (feel-good) and economic (live well) value.

When you align your giving with your beliefs, you have the opportunity to amplify the impact. For example, supporting a charity that connects with your personal story or helping your children pursue a better future can foster an extraordinary sense of purpose and fulfillment.

At iWealth, we strongly believe in giving back to our communities through various forms of donations and volunteer efforts, supporting education, crisis aid, ministries, and the arts.

What Are the Deadlines for Year-End Giving?

Timing matters. The IRS considers the date your gift was made, not when it clears the bank, so ensure your contributions are postmarked or processed by December 31 of the year in which you intend to claim the deduction.

Here are two key distinctions to keep in mind:

• Charitable Gifts: Whether you’re writing a check, donating appreciated stock, or using a Qualified Charitable Distribution (QCD) from your IRA, your contribution must be completed by year-end to count for the current tax year.
• Gifts to Family: Similarly, cash or asset transfers to family members must be made by December 31 to apply toward your 2025 gift tax limits.

Watch our podcast episode on: “Giving Back: The iWealth Foundation Is Making A Local Impact”

Can You Use Your Required Minimum Distribution (RMD) for Charitable Giving?

Yes. RMDs are one of the most tax-efficient ways to give if you’re age 70½ or older. Here’s an example of how you can leverage this tactic:

Let’s say you’re 72 years old and have a Traditional IRA with an RMD of $25,000 for the year. You’re already comfortable with your pension and Social Security income, and adding $25,000 would just increase your taxable income, potentially pushing you into a higher tax bracket or increasing the taxes you pay on your Social Security benefits.

Instead of taking the RMD into your bank account, you could directly transfer up to $100,000 from your IRA to a qualified charity through what’s called a Qualified Charitable Distribution (QCD).

The benefit:

• The $25,000 donation satisfies your RMD requirement for the year.
• The amount isn’t included in your taxable income, which can help lower your adjusted gross income (AGI).
• Lower AGI can also help reduce taxes on Social Security and potentially lower Medicare premiums.
• The charity receives the full $25,000 (since taxes do not impact your donation).

When it makes sense to use this strategy:

• You’re charitably inclined and want to give back to your church, hospital, university, or another charity.
• You’re no longer itemizing deductions so a regular charitable deduction wouldn’t benefit you.
• You want to keep your taxable income as low as possible while still meeting the RMD requirements.

While these transfers can take a few weeks to complete, it’s essential to initiate them well in advance of the end of the year. At iWealth, our financial planners in Minnesota can help you coordinate your RMD-based giving strategies to avoid last-minute complications.

How Much Can You Gift to Family Without Tax Consequences?

For 2025, the annual gift exclusion allows you to give up to $19,000 per person without filing a gift tax return. That means as a couple, you and your spouse could gift $38,000 per child or grandchild in a single year, which is a simple and effective way to transfer wealth over time.

For the 2025 tax year, the federal lifetime estate and gift tax exemption amount is $13.99 million per individual (which means up to $27.98 million for a married couple, assuming both spouses use all of their exemptions).

A few additional observations you’ll want to consider for planning purposes:

• This exemption amount applies jointly to lifetime taxable gifts plus estate transfers at death; therefore, gifts in excess of the annual exclusion reduce the remaining exemption available at death.
• The exemption is indexed for inflation.
• Under prior law, the exemption was scheduled to drop sharply starting January 1, 2026. Recent legislation (the One Big Beautiful Bill Act) now raises the exemption to $15 million per individual ($30 million per married couple) beginning in 2026, adjusted for inflation in future years.

These gifts can be used for education savings, investment accounts, or even to help young adults cover housing or childcare costs. It’s a way to support family members while reducing the size of your taxable estate.

While gifts above this threshold aren’t necessarily taxable, they do require you to file a gift tax return, and the excess amount counts against your lifetime estate tax exemption. If you’re considering larger transfers, an estate planning conversation with your advisor is essential to avoid unintended consequences.

Watch Brad speak with Kristin Gunsolus in “Estate Planning 101: Avoid These Common Mistakes”

Should You Give Cash or Appreciated Assets?

Cash gifts are the simplest, but not always the most efficient. If you have investments that have appreciated significantly in value, donating those assets directly can provide a double benefit:

1. You avoid paying capital gains tax on the appreciation.

2. You receive a charitable deduction for the fair market value of the asset.

Suppose you’ve held the asset for more than a year. In that case, this strategy can be compelling, especially when coordinated as part of your Minnesota estate planning or broader retirement tax strategy.

How Can You Involve Your Family in Giving?

Giving is most meaningful when it becomes part of your family’s story. Many families in Minnesota and throughout the country use the holiday season as an opportunity to teach younger generations about financial stewardship and the importance of generosity.

• Let your children or grandchildren choose a charity that the family wants to support together.
• Match their donations to amplify their impact.
• Set up a donor-advised fund or even a family foundation to organize giving over time.

If you’re interested in taking this step, iWealth can help you set up a family foundation designed around your values and long-term vision. A foundation allows you to formalize your charitable giving, involve family members in decision-making, and create a multigenerational legacy of purpose.

What If You Prefer to Give Your Time Instead of Money?

Financial generosity isn’t the only form of giving. Volunteering can be equally impactful, and, in some cases, even more rewarding.

Whether it’s serving meals, mentoring youth, or participating in community events, your time, knowledge, and talents can strengthen the specific organizations you might otherwise support financially. In fact, research shows that combining volunteering with charitable donations increases personal well-being and life satisfaction.

For many, volunteering becomes a key part of retirement planning, serving as a way to stay active, connected, and purposeful after leaving a career of accomplishments behind.

What’s the Best Way to Align Your Giving with Your Financial Plan?

Generosity doesn’t have to come at the expense of your retirement goals. When structured strategically, charitable and family gifting can complement your broader financial picture.

At iWealth, our financial planners in Minnesota help clients integrate gifting strategies into their long-term financial plans, taking into account factors such as retirement income, tax efficiency, estate planning, and legacy goals.

If you’re ready to make this year’s generosity part of a bigger financial story, our team can help you build a plan that’s as intentional as it is impactful. Let’s start the conversation.

Disclosures:

The iWealth Foundation, iWealth LLC, and iWealth are separate entities. Kristin Gunsolus is not affiliated with iWealth, iWealth LLC, or LPL Financial.