What’s the best way to pass on wealth to my children?

It depends on your family’s financial goals and dynamics. Some of the best options include setting up a revocable living trust, gifting assets during your lifetime, using Roth IRAs for kids with earned income, and utilizing life insurance to create liquidity or equalize inheritances.

Can I gift money to my children without paying taxes?

Yes. As of 2025, you can gift up to $18,000 per recipient per year (or $36,000 as a couple) without incurring gift taxes. You can also pay medical and education expenses directly to providers without it counting toward the annual limit.

Should I talk to my children about our estate plan?

Absolutely. Open communication can prevent misunderstandings and legal disputes down the road. It's helpful to explain your intentions and values, and consider involving your children in the planning process with your advisor.

What’s the benefit of using a trust instead of a will?

A trust helps your estate avoid probate, keeps your wishes private, and gives you more control over how and when your children receive assets. It can also include protective provisions in case of divorce, lawsuits, or poor financial management.

The Best Ways to Pass on Wealth to Your Children (Without the Headaches)

HFF Staff Writer
May 2
4 min read

An elderly couple consults with a man in an office. The man holds documents. The mood is serious, and a plant is visible in the background.

Let’s be honest—when it comes to passing on wealth, most people don’t exactly light up with excitement. It’s a tough subject. You’ve spent decades building your legacy, and now you’re staring down questions like: How do I make sure this actually benefits my kids? How do I avoid taxes eating away at it? How do I prevent them from blowing it all on jet skis?

We get it. Planning for your legacy isn’t just about transferring money—it’s about passing on values, preserving family harmony, and making sure your wealth actually helps the next generation, not hinders them.

So let’s walk through some of the best ways to pass on wealth to your children—and how to do it wisely.

Start With a Solid Estate Plan

We can’t say this enough: if you don’t have an estate plan, your state has one for you—and you probably won’t like it.

A will is the bare minimum, but it’s often not enough if you’re trying to minimize taxes, avoid probate, or add some guardrails to how your kids receive your assets. That’s where trusts come in.

Revocable Living Trusts

Think of a revocable trust like a “parental control” feature on your legacy. It lets you maintain control of your assets during your lifetime but sets up a clear plan for what happens when you’re gone. Plus, it helps your estate avoid probate—a lengthy, public, and often expensive court process.

You can decide how and when your kids receive the money—lump sum, installments, or even tied to milestones like graduating college or turning 30. If you’ve got concerns about financial maturity (and who doesn’t?), this can be a lifesaver.

Make Strategic Gifts While You're Alive

Want to see your kids enjoy your support now, not just after you're gone? Gifting during your lifetime is a powerful and often overlooked strategy.

As of 2025, you can give up to $18,000 per person per year (or $36,000 as a couple) without triggering gift taxes. This is a great way to gradually transfer wealth while reducing your taxable estate—and yes, you can gift to your kids, their spouses, your grandkids, whoever.

Better yet? There’s no limit on direct payments to medical providers or educational institutions on someone else’s behalf. That means you could pay for your granddaughter’s college tuition or your son’s knee surgery without it counting against your annual gift limit.

Consider Setting Up a Roth IRA for Your Kids

This one’s a little outside the box, but incredibly effective—especially if your children are still young and have earned income.

Let’s say your teenage son mows lawns in the summer and earns $4,000. You can contribute up to that amount into a Roth IRA on his behalf (as long as it doesn’t exceed his earned income). That money grows tax-free, and he can withdraw it tax-free in retirement.

The earlier they start, the more time compound interest has to work its magic. Plus, you’re helping them build strong financial habits—talk about a win-win.

Use Life Insurance as a Legacy Tool

Life insurance isn’t just for income replacement—it can also be a strategic way to pass on wealth, especially if you have a large estate or want to equalize inheritances.

For example, let’s say most of your wealth is tied up in real estate or a family business. Life insurance can provide liquid cash to your other heirs without forcing anyone to sell assets.

Some policies (like permanent life insurance) can also build cash value, offering you flexibility if your situation changes.

Talk About It. Seriously.

It might feel uncomfortable, but open communication is essential. A surprise inheritance—especially one with strings attached—can create confusion, resentment, or even legal disputes.

We’ve seen families fall apart over a misinterpreted trust document. We’ve also seen families thrive when parents took the time to explain why they made certain decisions and what values they hope to pass along with the money.

Don’t assume your kids will just “figure it out.” Talk to them. Better yet—bring them in to talk to us with you.

Every Family’s Different—And So Is Every Plan

Maybe your child’s great with money and already running their own business. Maybe they’re still figuring things out. Maybe you’re worried about future spouses, divorces, or creditors. Maybe you want to set up a charitable foundation in the family name.

There’s no one-size-fits-all solution when it comes to passing on wealth. And that’s exactly why we’re here.

At Halter Ferguson Financial, we help families build personalized wealth transfer strategies that reflect their goals, values, and unique family dynamics. We don’t just look at the numbers—we look at the people behind them.

Want to make sure your legacy is protected and put to good use? Let’s sit down and create a plan that gives you peace of mind today—and gives your children a better tomorrow.

Ready to build a legacy plan that actually works for your family? Reach out to Halter Ferguson Financial today. We’ll help you pass on more than just wealth—we’ll help you pass on wisdom.