You know when you read a book and, for whatever reason, it stays with you for a while? I recently read Die With Zero by Bill Perkins, and I’ve found myself continuing to come back to some of the messages that were shared in it.

The idea of gifting wealth while you’re alive rather than waiting to pass it all on after you’re gone is also called experience gifting. It’s a compelling strategy, and reading the book inspired me to share with you some of its advantages.

Enjoy the Impact

One of the biggest perks of experience gifting is getting to actually see the impact of your generosity. When one gifts money during their lifetime, they can see first-hand the joy and relief it brings to loved ones.  My clients have shared stories of the fulfillment of experience gifting and I love seeing the joy in their eyes when they share their stories. Whether it’s helping a child buy their first home, funding a family member’s education, or treating the family to a dream vacation, the gratitude and happiness are right there.

Imagine being able to help your child buy their first home. The excitement in their eyes as they walk through the door of their very own place is priceless. Or think about funding your grandchild’s college education, giving them a debt-free start in life. These are all moments you can contribute to and be there for, to see exactly how your support makes a difference.

Timing Is Everything

Timing is crucial. With many of us living into our mid-80s (or even 90s), inheritances usually pass on when the next generation is in their 60s. At that stage, most people are already settled and may not benefit as much from a financial boost. But when your loved ones are in their 30s, 40s, or 50s? These are the decades when big financial decisions are made—buying a home, starting a business, investing in education or giving them the confidence to retire sooner. A well-timed gift can change the course of their lives.

In your 30s, for example, you might be struggling with student loan debt, saving for a down payment on a house, or trying to start a family. A financial gift at this stage can take away so much stress and open up opportunities that might otherwise be out of reach. In your 40s and 50s, you might be looking to advance your career, invest in a business, or upgrade your living situation. A timely gift can provide the capital needed to take that next big step.

Types of Experience Gifting

There’s an IRS annual gifting tax exclusion, which for 2024 is $18,000 per donor. That means a couple can gift $36,000 to each child, grandchild, or loved one every year without having to pay federal gift taxes or even report the gift to the IRS.

You can consider funding special occasions and major life events like weddings, milestone birthdays, or graduations. Or you could offer ongoing support with regular, smaller gifts. This can have just as much of an impact! Monthly contributions to help with living expenses, for example, can give your loved ones extra stability and peace of mind.

How about treating everyone to a family vacation each year, where you all get to create unforgettable memories together? Or perhaps sponsoring a grandchild’s study abroad program, giving them the gift of cultural immersion and personal growth.

Donating money to nonprofits and causes you care about while you’re alive also lets you see the impact of your contributions. You can direct your donations to specific initiatives and witness the positive changes they bring about.

Plan Smart, Give Wisely

Experience gifting requires a solid financial plan. It’s wonderful to be able to make these generous gestures, but vital that you know you’re financially secure while making them. This approach is usually best for those with a comfortable net worth who can afford to help others without compromising their own financial security. Also, it’s important not to create dependency; recipients shouldn’t rely on these gifts as their primary financial support.

To start, you’ll need to take a close look at your finances. Determine how much you can afford to give without jeopardizing your own financial well-being. Make sure you’re working with your advisor on a comprehensive plan that outlines your gifting strategy, accounting for your long-term needs, including potential healthcare costs and unexpected expenses.

Lastly I want to thank Bill Perkins, the author of Die With Zero for helping me further solidify these thoughts that we’ve had in practice for years with our clients. If you think this could be a financial strategy that would benefit you and your family, don’t hesitate to book a call with our team.

This material is distributed for informational purposes only. Investment Advisory services offered through Journey Strategic Wealth, an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). The views expressed are for informational purposes only and do not take into account any individual’s personal, financial, or tax considerations. Opinions expressed are subject to change without notice and are not intended as investment advice. Past performance is no guarantee of future results. Please see Journey Strategic Wealth’s Form ADV Part 2A and Form CRS for additional information.