TRANSCRIPT
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#78 - 7 Smart Giving Strategies for Family and Charities Before Year-End
In this episode of The Simply Retirement Podcast, Eric Blake, CFP®, shares seven smart giving strategies to help you bless your family and favorite charities while strengthening your tax and retirement plan before year-end. Eric and Wendy McConnell discuss practical ways to give wisely — from annual gift exclusions and 529 plans to donor-advised funds and Qualified Charitable Distributions — so your generosity has lasting impact and aligns with your financial goals.
Introduction
Eric Blake: On today's show, we are going to talk about the best ways to gift money to your children, grandchildren, and even charities. With Thanksgiving and Christmas right around the corner, this is the season of giving. And here’s the bonus — many of these strategies not only bless others, but they may also help with your tax planning before year-end.
Welcome to another episode of The Simply Retirement Podcast, where we want to empower and educate women to live your retirement on your terms. I'm your host, Eric Blake, practicing retirement planner with over 25 years of experience and founder of Blake Wealth Management. I would not be the man I am today without the women in my life.
Back in Episode 61, we talked about the science of happier spending — and one of the top ways we found people experience the most joy is by spending on others. Today, we’re going to take that idea a step further and walk through seven ways to give and be generous. These are strategies you can put into action before the end of the year.
Joining me once again is Wendy McConnell. Wendy, how are you?
Wendy McConnell: I'm good. How are you doing?
Eric Blake: I'm well, I'm well. Getting excited because we actually found out that my daughter, granddaughter, and her husband are all going to be coming in for the holidays for Christmas. It’s the first time in a couple of years — with the baby now being almost two.
Wendy McConnell: Wow.
Eric Blake: So we’re very excited about that. We always enjoy the holidays, and our kids have always loved being at home.
Wendy McConnell: Yeah.
Eric Blake: We still call it home, even though my daughter lives in the Austin area.
Wendy McConnell: Yeah, and now you get to see Christmas through their eyes, right?
Eric Blake: Yes. It’s like magic all over again.
Wendy McConnell: I had a niece that I used to go over and watch open presents — it’s magical all over again.
Eric Blake: Exactly. And with my granddaughter now really grasping things, it seems like every single week she’s saying a hundred more words than she did the week before. It’s crazy. By the time they’re here, it’s going to be amazing to see.
Wendy McConnell: Can’t wait for you.
Eric Blake: Absolutely.
The Heart of Giving
Eric Blake: The reason for this episode is that many of the women we work with are very generous by nature. Back in Episode 75, when we walked through our year-end tax planning checklist, we talked about some numbers and strategies to finish the year strong from a tax perspective.
A number of those checklist items were around giving and donations. But I really wanted to go deeper into this topic — because at the heart of it, for many of our clients, it’s about the impact they can have on their families and the organizations they care about.
This is a time when people are thinking about giving, making donations, and impacting others around them. I wanted to talk about seven ways women can do this effectively — in ways that bring joy while also helping them meet internal needs and planning goals.
Wendy McConnell: If you can get a little bit of benefit out of it, all the better.
Eric Blake: Exactly. We don’t necessarily do these things for tax purposes, but if there’s a tax benefit, we don’t want to miss out. That’s for sure.
Listener Question
Eric Blake: Before we get into today’s topic, I have one quick listener question I wanted to touch on. The reason I wanted to address it is because it’s one of those misleading things that came out with the new tax law around the $6,000 deduction and its impact on Social Security.
Listener Question (from Kathy): “Does the $6,000 deduction for Social Security apply to the tax year of 2025?”
The quick answer is yes. But here’s the key point — the new $6,000 deduction does not directly impact Social Security. The new deduction is an age 65+ deduction and applies whether you have filed for Social Security or not.
So, Kathy, and anyone else with the same question — tune in to Episode 65, where we went into all the specifics of the new tax law. That episode should clear up any lingering confusion.
Wendy McConnell: So it’s good for everyone, regardless of whether you’re taking Social Security or not.
Eric Blake: Exactly. You just have to be 65 by the end of the year. Whether you’ve started Social Security or not doesn’t matter.
I think the confusion came from the Social Security Administration’s email that went out at 1:30 in the morning right after the law was passed — understandable that it caused some uncertainty.
And just a reminder — if you have a question, topic idea, or specific retirement challenge you’d like covered in an episode, visit simplyretirementpodcast.com/askeric.
Real-Life Example
Eric Blake: This is actually a conversation I recently had with a client — we’ll call her Sue for our purposes here. She received a sizable lump sum after selling a property she inherited from her mother.
One of her first questions was, “I want to give some of this to my adult children. I want to share this. How do I do it?” She wasn’t sure what the best way to do it was or how to avoid creating any gift tax issues.
These are real-life questions we get all the time, and that’s what I want to help clear up today — to give you ideas and information you can use during this season of giving.
We’re going to go through seven practical strategies you can use before year-end:
How much you can give without worrying about filing additional tax forms.
How gift tax actually works — and who it really impacts.
How to cover tuition or medical bills without affecting gift limits.
When gifting assets like stocks or property can be smarter than giving cash.
How to use 529 plans or custodial accounts effectively.
Charitable giving strategies and how they interact with the new tax law.
The benefits of donor-advised funds and Qualified Charitable Distributions (QCDs).
Now, there are many more complex charitable and gifting strategies that involve legal structures like trusts, but today we’re going to focus on actionable ideas you can use within just a few days or weeks — strategies that can make a difference right now.
Wendy McConnell: Let’s hear it.
Strategy 1: Annual Gifting Rules
Eric Blake: Strategy one is all about the annual gifting rules.
In 2025, you can give up to $19,000 per person without having to worry about any additional gift tax returns or tax paperwork. It doesn’t matter who it is — family, friends, neighbors, anyone. You can give $19,000 to as many people as you want.
This is called the annual exclusion. You can give $19,000 to your children, your grandchildren, or anyone else without any tax consequences.
Here’s where confusion often sets in. People hear “gift tax” and think, “If someone gives me money, am I going to owe taxes on it?” The truth is, the gift tax affects the giver, not the receiver.
Let me explain. Every individual currently has a $15 million lifetime exclusion for estate tax purposes — that’s a pretty big number, and most people will never come close to it.
So, if you give more than $19,000 to a specific person, you don’t owe any tax right now. You simply need to report it by filing IRS Form 709. The excess amount just reduces your lifetime $15 million exclusion.
For example, if I give someone $20,000, that extra $1,000 reduces my lifetime exclusion from $15 million to $14,999,000. Technically, it increases the chance that I could owe estate taxes someday — but for nearly everyone, it has no practical effect.
Wendy McConnell: Got it.
Eric Blake: Right. So, if you go above $19,000, you just file IRS Form 709 stating that you gave more than the annual exclusion amount, and that’s it.
In almost all cases, neither the giver nor the receiver pays any actual tax on the gift.
Now, if you’re someone with a very large estate, talk to your tax advisor or estate planning attorney to understand how the rules may apply to you personally. But for most people, the gift tax is more of a reporting requirement than an actual tax burden.
Also, if you inherit money, you might owe taxes when taking distributions from certain accounts — like an inherited IRA — but that’s a completely different situation. (If that’s something you’re wondering about, go back to Episode 52 where we covered it in detail.)
Strategy 2: Gifting Appreciated Assets
Eric Blake: Now let’s move to Strategy Two: Gifting Appreciated Assets — this is where giving stock or property can sometimes be better than giving cash.
Let’s say you have a stock that has grown significantly in value. If you’re in a higher tax bracket than your child or grandchild, you could gift $19,000 worth of that stock to them instead of selling it yourself.
They can then sell the stock at their lower tax rate, which means more of that value stays in the family rather than going to taxes.
Wendy McConnell: So they get to keep more of the money.
Eric Blake: Exactly. It’s a smart, tax-efficient way to give.
You can also do something similar when donating to charity. That $19,000 limit we discussed only applies when giving to individuals — not to charities.
So, if you have appreciated assets and want to give to a charitable organization, you can gift the stock directly to the charity. Because charities don’t pay taxes on investment gains, you avoid the capital gains tax and the charity receives the full value.
It’s a win-win — you potentially get a deduction, and the charity benefits without losing value to taxes.
Strategy 3: Paying Tuition or Medical Bills Directly
Eric Blake: Strategy three is a great one for grandparents or anyone who wants to help with education or healthcare costs.
If you pay tuition or medical bills directly to the institution — meaning you write the check to the school or hospital, not the individual — there’s no limit on how much you can pay.
That means the $19,000 annual exclusion does not apply.
You could pay a $25,000 tuition bill or a $50,000 medical expense directly, and it would not count toward your annual or lifetime gift limits.
Wendy McConnell: So many, many years ago, when my father was writing a check to my university, was he getting tax benefits from that?
Eric Blake: Not exactly. He wasn’t getting a deduction for the payment, but it allowed him to give you more overall.
If he had given you the $25,000 directly, anything above $19,000 would have required him to file a gift tax return. But by paying the university directly, he avoided that limit — and he could still give you an additional $19,000 if he wanted to.
Wendy McConnell: So he could have done both?
Eric Blake: Exactly. He could have written the tuition check to the school and still given you $19,000 personally.
So, when you’re thinking about how to help loved ones — maybe with education or medical expenses — paying the provider directly is a simple and effective strategy.
It’s all about understanding the purpose of your gift. If it’s meant to cover tuition, medical bills, or housing costs, you can structure it in the most efficient way.
Strategy 4: Education Accounts and Custodial Accounts
Eric Blake: Strategy four is about using education accounts, like 529 plans and custodial accounts, to support a child or grandchild’s education.
We all know how expensive college has become, and these accounts can help families save in a tax-efficient way.
529 plans are one of the best vehicles for this. You can contribute money that grows tax-deferred, and withdrawals for qualified education expenses are tax-free. You maintain control of the account, which is a big advantage over custodial accounts.
Custodial accounts — sometimes called UTMAs or UGMAs, depending on your state — are a bit less restrictive on how the funds can be used. However, once the child reaches the age of majority (either 18 or 21 depending on your state), that money legally becomes theirs.
That can be tricky if you intended it for specific purposes like college.
529s offer much more flexibility and control. Plus, recent tax law changes have expanded what counts as a qualified education expense. Funds can now be used for K–12 tuition, certain apprenticeships, and even up to $10,000 toward student loan repayment.
There’s also a newer concept called the “Trump Account,” designed for children born between 2025 and 2028. It starts with a $1,000 “seed deposit” and allows contributions up to $5,000 per year until the child turns 18.
Wendy McConnell: Okay.
Eric Blake: So again, depending on how much you want to give and what your purpose is, you just want to understand what your options are.
Now, here’s one of the best parts of 529s: You can “front-load” contributions. The annual limit is still $19,000 per person in 2025, but you can lump together five years’ worth of gifts into a single contribution.
That means you could contribute up to $95,000 in one year and have it treated as if it were spread evenly over the next five years.
Wendy McConnell: Alright, I like that.
Eric Blake: It’s a great way to jumpstart education savings and remove assets from your taxable estate while helping future generations.
Just make sure you understand your limits and how contributions fit into your broader financial and estate plan.
Strategy 5: Charitable Giving and Tax Law Changes
Eric Blake: Strategy five focuses on charitable giving — and how recent tax law changes affect your deductions.
When you give to a qualified charity — whether that’s money, clothing, or other assets — your donations may be tax deductible if you itemize deductions on your tax return.
However, after the Tax Cuts and Jobs Act of 2017, far fewer people itemized because the standard deduction increased significantly. That meant many people’s charitable contributions didn’t provide a tax benefit, even though they were still meaningful gifts.
Now, under the new tax law, there have been adjustments to something called the SALT cap (State and Local Tax deduction). The cap used to be $10,000 but has now been increased to $40,000.
If you live in a high-tax state with large property or income taxes, this could mean you’re more likely to itemize again — which may make charitable giving more tax-efficient.
Looking ahead to 2026, another change takes effect. If you don’t itemize, you’ll still be able to claim a bonus charitable deduction of up to $1,000 if you’re single or $2,000 if married — even if you take the standard deduction.
So, there are potential tax benefits on the horizon for charitable giving, regardless of whether you itemize or not.
Wendy McConnell: Okay.
Eric Blake: The key takeaway here is: Be aware of how these tax law changes might affect your giving strategy. Work with your advisor or CPA to run a tax projection, so you can plan your charitable contributions for maximum impact.
Strategy 6: Qualified Charitable Distributions (QCDs)
Eric Blake: Strategy six is one of my personal favorites because it benefits both your charitable goals and your tax plan — the Qualified Charitable Distribution (QCD).
If you’re age 70½ or older, you can make charitable donations directly from your IRA.
The key is that the money must go directly from the IRA to the charity — you can’t withdraw it and then donate it yourself.
We actually make this easy for our clients by providing a separate IRA checkbook for this purpose. That way, you can write checks directly to your church, animal shelter, or favorite organization.
Here’s how it helps:Let’s say your Required Minimum Distribution (RMD) for the year is $10,000. If you donate $5,000 directly from your IRA to a qualified charity, that $5,000 counts toward your RMD but is not taxable income to you.
It reduces your taxable income, potentially lowering your tax bracket and even your Medicare premiums.
For many retirees who no longer itemize — maybe because their mortgage is paid off or their deductions are limited — this is one of the most efficient ways to give.
Strategy 7: Donor-Advised Funds
Eric Blake: The seventh and final strategy is the Donor-Advised Fund (DAF) — a tool for people who want to manage charitable giving strategically over time.
Think of a donor-advised fund like a charitable investment account. You make a large contribution in one year, receive an immediate tax deduction (if you qualify), and then distribute those funds to your favorite charities over future years.
For example, let’s say you normally give $10,000 per year to various causes. But in 2025, you’re having a higher-income year — maybe you sold property, received a big bonus, or exercised stock options.
You could contribute $50,000 to a donor-advised fund this year, get the full deduction now, and then grant $10,000 per year to your charities over the next five years.
Wendy McConnell: So you’re thinking way, way, way ahead.
Eric Blake: Exactly. It’s a proactive way to manage your giving and your taxes.
As I always say, Uncle Sam only cares about this year. But the advantage we have is the ability to look ahead — to ask, “What can I do this year to reduce my lifetime tax liability?”
Being strategic about your giving — whether through QCDs, donor-advised funds, or appreciated assets — can have a powerful long-term impact on both your taxes and your legacy.
Key Takeaways
- You can gift up to $19,000 per person in 2025 without filing any additional tax forms.
The gift tax impacts the giver, not the recipient, and typically only affects very large estates.
Consider gifting appreciated assets like stocks or real estate instead of cash for tax advantages.
Pay tuition or medical bills directly to providers to avoid gift limits entirely.
Use 529 plans and custodial accounts to support education goals strategically.
Take advantage of Qualified Charitable Distributions (QCDs) if you’re 70½ or older to give directly from your IRA tax-free.
Explore Donor-Advised Funds (DAFs) to manage charitable giving across multiple years while capturing deductions in high-income years.
Always coordinate with your financial advisor or tax professional to ensure these strategies align with your broader retirement and tax plan.
Eric Blake: The holidays are about giving — but the smartest giving is the kind that blesses others while also helping keep your own plan strong. If you want to explore how these strategies could fit into your retirement plan, visit getmysimplyretirementroadmap.com to learn more about our three-step Simply Retirement Roadmap process.
Wendy McConnell: Sounds like there are so many ways to save on taxes and make a difference.
Eric Blake: That’s right. Give wisely, give joyfully, and remember — retirement is not the end of the road; it’s the start of a new journey.
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