With the federal estate and gift tax exemption now $15 million per person and no longer scheduled to drop, few families face pressure to make huge gifts quickly. But steady, well-chosen gifts are still one of the most effective ways to move wealth to the next generation, and to reduce Oregon and Washington estate taxes, which start far lower.
The annual exclusion
In 2026, you can give up to $19,000 to any number of people without using any of your lifetime exemption. A married couple can give $38,000 to each recipient. Over time, annual gifts to children, their spouses and grandchildren can move substantial wealth with no gift tax and no reduction in your exemption.
Gifts that don't count at all
Paying tuition directly to a school or medical expenses directly to a provider isn't treated as a gift, no matter how large. These payments are on top of the annual exclusion, as long as you pay the institution, not the family member.
529 plan superfunding
You can contribute up to five years of annual exclusions to a 529 plan at once, $95,000 per beneficiary, or $190,000 for a married couple, and elect to spread the gift over five years. Growth is tax-free for qualified education costs. The election is made on a gift tax return.
Using the lifetime exemption
Gifts above the annual exclusion use part of your $15 million exemption. Larger gifts make sense when you want to:
- Move assets expected to grow significantly, such as business interests or real estate, so future appreciation is outside your estate.
- Reduce an Oregon or Washington estate tax bill, since neither state has a gift tax.
- Help family members with a home purchase or business start now, when it matters most.
Common trust tools
- Spousal lifetime access trusts (SLATs) remove assets from your estate while allowing your spouse to benefit.
- Grantor retained annuity trusts (GRATs) transfer appreciation above an IRS interest rate with little or no gift.
- Intentionally defective grantor trusts let you pay the trust's income tax, which is effectively another tax-free gift.
- Intra-family loans at the IRS's applicable federal rate can fund a child's home or business while keeping the transaction at arm's length.
The basis trade-off
Gifted assets keep your original cost basis. Assets inherited at death generally receive a step-up to market value. Giving cash or high-basis assets, and keeping highly appreciated assets until death, often produces the best combined income and estate tax result.
Make it fit your family
The best plan balances taxes with control, fairness among children and your own financial security. Gifts are permanent, so we make sure you can comfortably afford them first.
The bottom line
A gifting plan works best as a steady, multi-year program coordinated with your estate documents. We help families decide what to give, how and when, and handle the gift tax returns and records that go with it.
This article is general information, not tax, legal or investment advice for your situation. Rules and thresholds change, so please talk with a qualified advisor before acting.
