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Aspen’s Jim Davis Featured in Kiplinger Article
November 10, 2025
By Jim Davis, CFP®
Most of us have heard the speech multiple times as we traveled on a commercial flight: we know how to put on our seatbelts, how to don the life jacket “in the unlikely event of a water landing,” and, of course, how to access the oxygen masks that will deploy in case of cabin depressurization. And we also know, if we’re traveling with children, that we should “put on our own mask first before attempting to help others.”
It’s a common-sense principle: you can’t be very helpful to someone else who’s depending on you if you’re incapacitated yourself. But had you ever considered that this same principle applies to your finances? Especially for those who are providing financial assistance to adult children, it’s important to remember that you shouldn’t compromise your own financial future—especially your retirement—for the sake of helping kids who are of an age to be able to help themselves. After all, if you sacrifice the security of your retirement while supporting your grown kids, you’re also making them responsible for the burden of taking care of you when you’re no longer able to manage on your own.
On the other hand, most of us want to be able to help our kids and even grandkids to have a better, more productive life. And there are several methods and principles that can help us avoid jeopardizing our own retirements as we provide a financial boost to the next generations. Let’s take a look.
Strategic, Not Reactive
This is perhaps the most important overall principle to keep in mind. Focus on gifts that help the recipients achieve better financial security, rather than simply opening the checkbook in response to the latest request. Strategic giving would certainly encompass the structure of wills and trusts in the context of estate planning (more on this later), but it could also include planned deposits to an account intended for the down payment on a first home, contributions to a 529 education account, or even a Roth IRA (for a child or grandchild with earned income) funded by periodic gifts. The point is, by structuring your gifts in ways that help them reach important financial milestones (instead of paying for groceries, rent, or other day-to-day living expenses), you’re giving them a leg up that will matter for years to come, rather than just tiding them over to the next payday.
Gifting and Your Estate
Even for those of more modest means, having a valid will, healthcare directive, and power of attorney is essential. These documents allow you to direct how your financial and other assets will be handled after your passing, along with who makes which decisions related to your final health and financial matters. Perhaps most importantly for the current discussion, a will can provide direction about how you want your financial assets divided among your heirs. Providing such direction is basic to passing on your final gifts to children and grandchildren in the way that you think will be most beneficial for them.
Moving beyond the basics of a will, various types of trusts may also be advisable for those who want to retain a bit more control over the timing and amount of assets gifted to heirs. Trusts can be structured to provide specified amounts upon certain dates (such as the attainment of a certain age by a recipient) or certain events (such as the achievement of gainful employment for a specific period). Trusts can also be structured to afford income to the grantor (the person making the gift) during their lifetime, then passing remaining assets to heirs and other beneficiaries upon the grantor’s passing. In other words, trusts can be used to create opportunities for gifting that still protect the grantor’s financial stability during retirement.
Gifting and Your Taxes
Especially for those with more extensive estates, it is important to consider the tax implications of providing gifts to the next generations. Perhaps the best place to start is by understanding the annual gift tax exclusion. In 2025, a person can give away up to $19,000 per year to as many individuals as desired (a married couple can give up to $38,000) without the need for filing a gift tax return. Staying within these limits also means that your lifetime gift exclusion of $13.99 million ($27.98 for couples) is not reduced. If you are in a position to make gifts of this size, keep these limits in mind to maximize your lifetime gift ability.
Speaking of gifts, it may be more advantageous to gift appreciated assets, such as listed securities, real estate, or even collectibles. By doing this, you may be able to avoid paying capital gains taxes, and if the recipients need to liquidate the items, they will receive a stepped-up cost basis (the fair market value at the time of the gift) that may enable them to pay much less in capital gains, if any. They may also be in a lower tax bracket. This, by the way, is another example of being strategic, rather than reactionary, with your giving.
Have a Plan and Communicate It
The bottom line of all this is that you should have a plan for giving money or other assets to your children or grandchildren, rather than simply responding to each real or imagined emergency as it arises. Your plan should take into primary consideration your needs for retirement income; you’ll want to avoid burdening your children with the responsibility for your financial upkeep. Next, your plan should aim to support strategic financial goals for your recipients. Finally, your plan should consider the needs of your estate, including the tax implications of your giving. Once the plan is developed, spend some time having earnest, two-way conversations with your children. The more you can explain the logic behind your plan, including your own requirements for financial security, the less uncertainty or even resentment you’ll risk on the part of those whom you’re trying to help.
Your Aspen advisor can be a valuable guide as you develop your financial assistance plan for the next generations. To learn more about how we can help, please take time to read our article, “Estate Planning Is Not Like a Crock Pot (and Other Mistakes to Avoid.”