I’m 62 and worth millions – how can I give more to my kids without getting slammed on taxes?

Benjamin Franklin is famous for many things, including the following quote: Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.

Death and taxes are two dreaded topics that are closely aligned. Their confiscatory premise is a continual source of perceived injustice and strategic planning to find a workaround or loophole to give more to family members without government pilferage. Gift taxes were created by Congress and the IRS to serve as a deterrent to those seeking to give funds to family before their demise, when estate taxes (i.e., Death Taxes), would apply to the existing estate’s total worth.

Dave Ramsey is the host of a syndicated radio show about financial advice. He recently addressed the topic of gifting when a caller wanted to give a large sum to his son-in-law for growing his business without triggering gift taxes.

The Caller’s Dilemma

Dave Ramsey’s syndicated radio show regularly gives financial tips to listeners seeking guidance.

• 62 year-old with net worth of $10-12 million wishes to gift money to his son-in-law for his musical instrument repair business,
• He proposed treating the initial funds (roughly $300,000) as a property or mortgage loan note for the son-in-law to purchase or rent a larger workshop space.
• Subsequent cash gifts under the current $19,000 threshold ($38,000 for married couples utilizing gift-splitting) could be used by the son-in-law to pay off the loan by installments, thus avoiding immediate tax reporting.

Ramsey’s Advice

Ramsey concurred with and preferred the caller’s plan. As an alternative choice, he suggested the following:

• Using part of the Federal lifetime estate tax exemption and declaring the $300,000 against that lifetime total limit. Following the passage of the One Big Beautiful Bill Act (OBBBA), this lifetime exemption limit is set at a permanent baseline of $15 million per individual ($30 million for married couples).
• Use of the Unified Estate Tax Credit while alive reduces the available exemption remaining after one’s demise.
• Noting that the caller was still relatively young at age 62, his estate would probably continue to grow. However, given the permanently expanded $30 million unified baseline for couples, the mathematical risk of outgrowing the threshold by consuming a portion early has significantly shifted.
• Under the caller’s plan, he takes advantage of the inflation-adjusted upward trajectory of annual exclusions, which have advanced to $19,000 per recipient.
• Ramsey also added that loan forgiveness, which is also non-taxable up to annual exclusion boundaries, could be a component of the caller’s will document.
• The loan note could just be a one page record that is updated by hand and initialed each year, as acceptable to the IRS.

State-Level Tax Traps to Consider

While federal tax updates provide relief for multi-million dollar estates, local jurisdictions introduce distinct risks. Twelve states and the District of Columbia enforce individual estate taxes, and six states levy distinct inheritance taxes. Because state-level decoupling thresholds often start as low as $1 million to $2 million, an estate worth $10 million to $12 million remains completely insulated from federal exposure but faces liabilities depending on state residency.

Takeaways and 24/7 Key Points:

My personal experience in small business finance concurs with both the caller’s and Ramsey’s plans and comments. Perhaps the only additional consideration to add might be to structure the deal like a venture capital financing if the son-in-law’s expansion plans involve taking on future investors or a buyout offer from a larger competitor down the road. This can be formalized via Simple Agreements for Future Equity (SAFEs) or Convertible Promissory Notes. The caveat, however, is that the payments would trigger a 1099 tax for the caller. This would be the following:

• Structuring the arrangement via equity tools or a SAFE keeps senior debt obligations off the workshop’s balance sheet, increasing the business’s viability for commercial bank financing or institutional backing.
• If the funding converts to corporate equity, subsequent payout distributions are categorized as qualified dividends, allowing them to be taxed at long-term capital gains rates rather than ordinary income brackets generated by imputed interest.

Advanced Wealth Transfer Alternatives

For high-net-worth positions exceeding standard limits, alternative shielding structures provide permanent utility. Implementing a Family Limited Partnership (FLP) allows parents to consolidate business assets, retaining control as general partners while distributing non-voting limited partner equity to descendants. Because non-voting equity inherently lacks marketability, valuation discounts often decrease the taxable impact of the transfer. Similarly, Intentionally Defective Grantor Trusts (IDGTs) serve to freeze asset values for estate evaluations while permitting the grantor to clear the trust’s income tax liabilities independently.

This article is intended to be strictly informative and opinion-based only, and not construed to be tax or financial advice. It is advised that professional tax and financial counseling be sought before undertaking any steps in that field.

Editor’s Note: This text has been updated to reflect current federal tax guidelines, including the annual gift tax exclusion increase to $19,000 and the permanent expansion of the lifetime unified estate and gift tax exemption under the One Big Beautiful Bill Act. New sections have been added providing a technical analysis of Simple Agreements for Future Equity (SAFEs) and convertible notes in family business contexts, state-level estate tax decoupling boundaries, and advanced wealth management vehicles including Family Limited Partnerships and Intentionally Defective Grantor Trusts.