A survey by Deloitte published earlier this year confirms that young people are stressed about finances. The study says nearly half of Gen Zers and millennials are “insecure” financially speaking and many are living paycheck-to-paycheck.
Broadly speaking, baby boomers are in significantly better financial positions – a testament to solid planning and working with the right advisors, among other factors. That is to say if boomer parents and grandparents so choose, they can alleviate some financial burdens for their kids and grandchildren. Obviously, financial gifts are optional and smart givers ensure there are strings attached, including that the gifted cash will be allocated to “pure” purposes, not frivolities.
Boomers that find themselves in giving moods are right to consult with an advisor who is likely to point there are some tax perks associated with this strategy. As Serae Wealth notes, there is the gift tax exclusion, which can have favorable effects on broader estate planning strategies.
“For 2025, individuals can give up to $19,000 per recipient without incurring tax consequences, yet many affluent Boomers significantly underutilize this opportunity to transfer wealth to younger generations while reducing taxable estates,” according to the wealth management firm.
That $19,000 Can Go a Long Way
Let’s be honest. For most of us, regardless of age, a gift nearly $20,000 would be meaningful, but there are ways for well-heeled boomers to compound their $19,000 worth of generosity.
“The $19,000 limit applies per recipient and can be given to an unlimited number of individuals,” said Joe Anderson, senior wealth manager and founding partner at Serae Wealth. “For example, a grandmother could gift $19,000 to her child, $19,000 to that child’s spouse and $19,000 to each of two grandchildren, for a total of $76,000. Her spouse could do the same, effectively doubling the gift to $152,000 for the same family.”
Parents and grandparents that worried about gifting too much cash to younger relatives need not fret about the tax implications and an advisor can assist on this front. Put simply, unless the giver is giving well into eight figures, the tax situation is mostly sanguine.
“If a parent gives $100,000 to a child in 2026, the first $19,000 is excluded,” explained Scott Hefty, Senior Wealth Manager and Founding Partner at Serae Wealth. “The remaining $81,000 simply counts toward the parent’s lifetime exemption. No immediate tax is owed, but the gift must be reported on IRS Form 709 to track cumulative gifting. Only when total gifts exceed the lifetime exemption of $15 million per person in 2026 would the federal gift or estate taxes apply.”
Be Strategic
For boomers that are considering helping out younger heirs, start by talking with an advisor. After all, you’ll want to ensure that you and the receiver are getting the related tax perks and as a giver, you need to know that you can afford the “donation” in the first place.
You’ll also want to evaluate what strings, if any, accompany the cash gift, and what role tough love might play in the scenario. Point is be strategic.
“The key is to approach gifting strategically rather than reactively,” Anderson added. “By understanding the rules and planning ahead, families can make meaningful financial gifts while avoiding unnecessary tax complications and ensuring their own long-term financial security.”
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