A legacy gift is one that outlasts the occasion. It contributes to a family’s history, grows in value over time or preserves something irreplaceable.
Unlike most gifts, legacy gifts are recognized for years and continue to provide value well into the future.
For individuals of significant means, a legacy gift may represent the largest charitable contribution they ever make. Such a gift can create meaningful change within a community. When establishing a family legacy, a donor may choose to associate their name with a building, scholarship, professorship or other charitable asset. These naming rights serve as a lasting reminder of the donor’s generosity.
Even if you are not wealthy, supporting a charitable cause reflects what matters most to you. With thoughtful planning, charitable giving may also provide income tax deductions, help avoid capital gains taxes, or reduce estate taxes at death.
Philanthropy offers a powerful way to create a family legacy that extends beyond material wealth. Holding annual family meetings to discuss charitable giving and involving relatives in decision-making can foster an enduring tradition of generosity and social responsibility across generations.
Leaving a legacy through family
Perhaps your goal is not to support a charity but to help family members. Because of the emotional implications and personal relationships involved, gifting to family is often more complicated than giving to a charitable organization.
At times, gifts can be perceived as having strings attached, with recipients believing the gift is contingent on certain decisions, lifestyles or behaviors. If that is not your intention, clearly communicate your purpose before making the gift. The gift should not be tied to future behavior, financial decisions or lifestyle choices. Instead, it should reflect love, support and a desire to help.
Consider writing a letter explaining why creating a family legacy is important to you. Perhaps you are funding a 529 plan because you want your child or grandchild to avoid student loan debt, or helping with a down payment because you hope to provide long-term financial security through homeownership. Sharing your motivations can help recipients better understand the meaning behind your gift.
Understanding gift tax rules
Each year, the IRS allows you to give a certain amount of money to as many individuals as you choose without triggering gift tax consequences.
In 2026, you can give up to $19,000 per recipient with little more required than transferring the funds. Neither you nor the recipient generally needs to notify the IRS of the gift.
If you are married, gift-splitting rules allow you and your spouse to give up to $38,000 per recipient annually. This limit resets each January, providing an opportunity to revisit your gifting strategy every year.
For gifts that exceed the annual exclusion amount, the IRS requires the filing of Form 709 in the year following the gift. The excess amount is applied against your lifetime gift and estate tax exemption, currently $15 million and indexed for inflation. Once that exemption has been exhausted, a 40% gift tax generally applies to additional transfers.
The IRS also permits certain gifts that do not count against your lifetime exemption and do not require reporting on Form 709:
—Direct tuition payments: Tuition paid directly to an educational institution is exempt from gift tax. This applies to education ranging from pre-kindergarten through doctoral programs, but only for tuition expenses.
—Direct medical payments: Payments made directly to medical providers or health insurance companies for qualified medical expenses, including hospital care, physician services, dental care, prescriptions, mental health treatment, and long-term care, are exempt from gift tax.
—Charitable contributions: Gifts to qualified charitable organizations are not subject to gift tax and generally do not require reporting as taxable gifts.
Giving without conditions
If you make a substantial gift to a family member, consider avoiding similarly large recurring gifts that might create expectations. A gift intended to mark a special occasion or achievement should feel meaningful rather than become an expected source of financial support.
Once a gift is made, allow the recipient the freedom to decide how to use it. Avoid micromanaging their choices. Spending family money can create feelings of guilt if recipients worry they are not using it in a way the donor would approve of. When a gift becomes entangled with family dynamics, it can diminish the recipient’s enjoyment and potentially strain the relationship.
A lasting family legacy is not built solely through financial gifts. It is also shaped by shared experiences, traditions, and values. Annual gatherings, volunteer projects, family vacations, and shared hobbies can strengthen family bonds and create meaningful memories that endure for generations.
When giving to children or grandchildren, strive to avoid the perception of strings attached. Thoughtfully structured gifts, such as funding education, assisting with the purchase of a home, or establishing a trust, can provide meaningful support while preserving their independence. Clearly communicate that the gift is an expression of your generosity, not a condition for future behavior.
A meaningful legacy does not happen by accident. It requires thoughtful planning and intentional action. Whether you create your legacy through a significant charitable contribution, a named gift, or financial support for loved ones, you have an opportunity to make a lasting difference in the lives of others.
Teri Parker is a certified financial planner and vice president for the Riverside office of Captrust Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her via email at Teri.parker@captrust.com.