When it comes to leaving a legacy, many Michigan families want to ensure their children receive the wealth they’ve worked hard to build, without it being chipped away by avoidable taxes. Fortunately, with smart gifting strategies, you can pass assets to your loved ones efficiently and in a way that minimizes tax burdens.
At Steslicki & Ghannam, our estate planning attorneys in Plymouth help families develop clear, customized plans that protect wealth and avoid common pitfalls. Here’s what you need to know about gifting to your children while keeping taxes in check.
Understanding the Federal Gift Tax
First, it’s important to know that Michigan does not have its own gift tax. However, the federal government does impose a gift tax, which kicks in once your gifts to a person exceed a certain threshold.
As of 2025, the annual gift tax exclusion allows you to give up to $19,000 per person per year without having to file a gift tax return or pay any gift taxes. If you and your spouse gift together, you can give up to $38,000 per child per year.
Gifts above the annual limit count against your lifetime estate and gift tax exemption, which in 2025 is expected to be around $6.4 million per person, though this could change with tax law revisions. With smart planning, you can leverage this exemption to transfer significant wealth tax-efficiently.
Strategy 1: Use Annual Exclusion Gifts
This is the simplest and most effective strategy for many families. By giving your children (or even grandchildren) up to $19,000 each year, you gradually transfer wealth out of your estate, reducing the potential estate tax down the line.
This can be done through:
- Cash gifts.
- Checks or bank transfers.
- Direct payments for education or medical expenses, which don’t count toward the $19,000 limit if paid directly to the institution.
Strategy 2: Set Up a Trust
A gift trust, such as an irrevocable trust, can offer more control and asset protection. You can designate when and how your children receive the money, which is especially helpful if you’re concerned about their age, financial habits, or future creditors.
Trusts can also help preserve your lifetime exemption, and in some cases, grow the assets outside your taxable estate.
Strategy 3: Gift Appreciating Assets Early
Gifting stocks, real estate, or business interests now, rather than later, allows future appreciation to happen in your child’s hands—not yours. This removes the future growth from your estate, helping avoid estate taxes later. However, this strategy does involve carryover basis rules for capital gains, so it’s important to weigh the pros and cons with a qualified attorney.
Work With a Michigan Estate Planning Attorney
Passing wealth to your children is more than a financial transaction—it’s part of your legacy. At Steslicki & Ghannam, our estate planning attorneys in Plymouth are here to help you craft a smart, tax-conscious plan that reflects your goals and protects your family’s future.
Contact us today for a personalized consultation and start building a gifting strategy that works for you and your loved ones.
