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“Giving while living” is a phrase associated with billionaire philanthropists, but there are compelling reasons to share your wealth while you’re alive even if you aren’t a billionaire.

One reason for “giving while living” is so your loved ones can use your wealth at the very time they need it. For example, your child needs help buying a home because his or her family is expanding. Or perhaps your child needs help paying for your grandchildren’s day care.

The easiest way to transfer your wealth during your lifetime is by gifting outright, e.g., giving a check or wiring money into an account.

The IRS’ annual gift tax exclusion for 2024 is $18,000 for individuals, or $36,000 for a married couple, with any higher amounts needing to be reported on a federal gift tax return, but you very likely won’t actually pay any taxes. That’s because those reported amounts will count toward your lifetime estate and gift tax exemption amount, which is a generous $13.61 million in 2024.

Let’s say you gift your child a $100,000 down payment on a home, then $82,000 of the payment ($100,000 – $18,000) will need to be reported and will count toward your federal estate tax exemption. Keep in mind, that still leaves a lot of the federal tax exemption unused.

However, not all gifts need to be reported. Payments for medical expenses and tuition are exempt from the federal gift tax. So long as you pay the invoices directly, you can help children or grandchildren avoid student debt or pay for the health care of a loved one with a chronic illness without those gifts being taxable.