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Gifting to family members provides for their needs while advancing your estate plan. In addition to the benefits your relatives receive, strategically gifting may decrease your transfer tax liability by lowering the value of your estate. Below are five methods to maximize the value of family gifts for donors and recipients. 1. Annual gift exclusion For tax year 2025, the IRS allows you to gift up to $19,000 tax-free to as many people as you want, and married couples can give up to $38,000 to an individual without triggering a taxable gift. Both recipients and donors can benefit from annual gifts. In contrast to an inheritance, recipients can enjoy the gift immediately without losing any value to pay transfer taxes. Donors can coordinate annual gifts to achieve estate planning objectives like potentially decreasing their estate tax liability by lowering the value of their estate. 2. 529 accelerated gifting By making an accelerated gift to a qualified tuition program (QTP) like a 529 plan, you can contribute up to five times the annual exclusion ($95,000 for individuals and $190,000 for married couples in 2025) in a single year tax-free. This strategy can provide significant value for those aspiring to attend college while lowering the value of the donor's estate. 3. Lifetime estate and gift tax exemption The 2025 federal lifetime estate and gift tax exemption amount is $13.99 million for individuals and is effectively doubled to $27.98 million for married couples. This means the total value of one's estate plus any taxable gifts can generally be transferred tax-free up to that amount. Using the lifetime exemption now, at its historically high level, may lower your eventual estate tax liability. 4. Medical exclusion The medical exclusion is another way to give a gift to family members by paying for their medical expenses without triggering a taxable gift. The payment must be made directly to the care provider and be solely used for qualifying medical expenses as defined by the IRS. Donors can also pay for health insurance under the medical exclusion, but payments for medical care that are reimbursed by the recipient's insurance company do not qualify. 5. Educational exclusion Gifts that qualify for the educational exclusion are also not subject to the gift tax. The gift must be paid directly to a qualifying educational institution and exclusively used for tuition. Giving to Family: Tax Efficient Gifting Strategies for Your Estate Plan By Scott LaPresta, CTFA, Senior Vice President, Director of Private Client Advisors, Commerce Trust, and Amy Stiglic, CTFA, Senior Vice President, Market Executive, Kansas City, Commerce Trust *Commerce Trust does not provide tax advice to customers unless engaged to do so. The opinions and other information in the commentary are provided as of January 16, 2025. This summary is intended to provide general information only, and may be of value to the reader and audience. This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Commerce Trust is a division of Commerce Bank. Investment Products: Not FDIC Insured | May Lose Value | No Bank Guarantee GIFT STRATEGICALLY WITH COMMERCE TRUST Gifting to family members may seem straightforward, but care is needed to ensure the value of the gift is not diminished by taxes. If gifting is a priority for you, contact Commerce Trust at www.commercetrustcompany.com/estateplanning to learn how our tax management,* estate planning, and education planning professionals collaborate to execute a customized estate plan that is unique to you.