Strategy 80 of 107 · new for the five-year plan
A parent's or grandparent's large gift, using their lifetime exemption
What it is
Above the yearly gift limit, a person can give much more using their lifetime exemption ($15 million each in 2026) and usually owe no tax.
Steps
- Above the yearly gift limit, a person can give much more using their lifetime exemption ($15 million each in 2026) and usually owe no tax.
- The giver files Form 709 to report it.
- The gift goes straight to principal.
Repeat: Once, or a few times.
Measure: Gift amount.
Try it in the calculator Enter its amount in "One-time amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- A gift can make the giver ineligible for Medicaid for up to five years.
- The giver must keep enough for their own life.
- Treat siblings fairly, in writing.
Who it fits
Newlyweds, Married couples, Single, College students, No high school diploma, No college degree, Average household
Needs
Family willing and able to help
How predictable
Depends on people or program rules (tenants, family, IRS records, lenders)
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (newlyweds). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: above the yearly gift limit, a person can give much more using their lifetime exemption ($15 million each in 2026) and usually owe no tax.
Suppose it brings a one-time $100,000 on principal. The loan would be paid off in 13 years 1 month instead of 30 years, saving about $285,309 in interest. To finish in five years, they would still need about $2,017 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Five-year sprint: family help: A large gift under the giver's lifetime exemption, then yearly gifts and shared costs. Fair treatment of siblings in writing.
Sources and more information
Where to get help
Related strategies
- 81. 73 and over: send required distributions you don't need to principal
- 78. Sell digital assets held outside retirement accounts
- 82. Use an annuity's yearly free-withdrawal amount
- 77. Sell some future structured settlement payments, only with court approval
- 83. Find lost pensions and old retirement accounts
- 76. Surrender a policy you no longer need, for its surrender value