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Taxes, Trusts, and Giving: The Year End Strategy

  • Writer: Gustaf Rounick, CFP®, ChFC®
    Gustaf Rounick, CFP®, ChFC®
  • Nov 6, 2025
  • 9 min read

Updated: Nov 19, 2025


As the year winds down, even small decisions can make a difference. Think of this like the last games in a long tennis set. You do not need a brand new swing. You just need to pick the right shots and finish with intention. What follows are ten practical moves, ordered from the ones that touch nearly everyone to those that matter mainly for trusts and foundations. I keep the language plain and the steps realistic. Use this as a menu, choose what fits, and coordinate with your CPA and attorney as needed. The goal is simple: fewer surprises in April, more alignment with what matters to you, and a clean start to the new year.

Important: This material is for general information only. It is not tax, legal, or accounting advice. Confirm specifics with your CPA and attorney. Tax rules change and can apply differently based on your facts.

1) Check your tax payments and avoid surprises

Before the calendar flips, confirm whether your withholding and estimated payments will keep you clear of underpayment penalties. For 2025, the federal safe harbor is: pay 90% of this year’s tax, or 100% of last year’s tax (110% if your 2024 AGI was over $150,000; $75,000 if married filing separately). If you are behind, increasing December payroll withholding can be an efficient fix because withholding is treated as if paid evenly throughout the year. Estimated tax due dates for 2025 are April 15, June 16, September 15, and January 15, 2026 (weekend and holiday rules can move dates). The 3.8% net investment income tax starts at $200,000 of MAGI for single or head of household filers and $250,000 for married filing jointly. IRS


In California, the elective pass‑through entity tax (PTET) has its own prepayment track: by June 15 of the taxable year (June 16 in 2025 under weekend rules) pay the greater of $1,000 or 50% of the prior‑year elective tax, with the balance due by the original return due date. Plan those cash needs alongside your federal estimates. State of California Franchise Tax Board


2) Time income and deductions with intention

A little calendar work can improve your two year picture. Start by checking whether you will itemize this year or take the standard deduction. For 2025, the standard deduction is $15,750 for single filers, $31,500 for married filing jointly, and $23,625 for heads of household. The SALT cap is $40,000 for most filers ($20,000 if married filing separately), subject to a phaseout at higher incomes.


Run the numbers before prepaying property tax or state estimates. If you are close to itemizing, bunching charitable gifts, property tax, and planned medical procedures into one year can make those dollars count. If your 2026 income will be lower, consider deferring discretionary income or option exercises. Watch AMT if you are considering ISO exercises or large state tax payments. IRS


3) Complete gifts by December 31, especially noncash

Do not wait until the last week of December if you plan to give appreciated assets. Transfers of stock or mutual funds to charities or donor advised funds (DAFs) have custodian cutoffs, and gifts of real estate or closely held interests need appraisals and extra paperwork. Cash gifts to public charities are generally deductible up to 60% of AGI; long‑term appreciated property to public charities up to 30% of AGI; and to most private foundations up to 20% of AGI. For noncash gifts over $5,000, a qualified appraisal is required, dated within 60 days before the gift and obtained by your return due date, including extensions. Publicly traded securities are exempt from the appraisal requirement. IRS


4) Front‑load or bundle charitable gifts when it makes sense

Bunching several years of giving into 2025 can make itemizing worthwhile if you usually sit near the standard deduction. A DAF is a simple way to do this: contribute appreciated securities in 2025, take the deduction now, and recommend grants over time.

Remember that once contributed, the DAF sponsor has legal control and the gift is irrevocable; be sure the size of the contribution fits your cash flow and risk tolerance. Each sponsor sets December deadlines for receiving securities, so start early. IRS


5) Use annual gifts while they still help

Annual exclusion gifts move future growth out of your estate and support people you care about. In 2025, you can give $19,000 per recipient without using lifetime exemption, or $38,000 with gift splitting. Direct payment of tuition or medical expenses to the provider does not use your annual exclusion.


If you are funding a 529 plan, consider whether the five year election makes sense; in 2025 that can allow up to $95,000 per beneficiary ($190,000 for a couple electing to split gifts) in one year, reported on Form 709. California does not offer a state income tax deduction for 529 contributions, but the federal tax free growth still compounds. Keep simple records of who received what and when. IRS


6) Consider qualified charitable distributions from IRAs if eligible

For donors age 70½ or older, a qualified charitable distribution (QCD) sends IRA dollars directly to charity without increasing AGI. A QCD must go directly from your IRA to an eligible charity (not to a DAF, supporting organization, or most private foundations).


For 2025, the QCD limit is $108,000 per person, with a one time option to give up to $54,000 to certain split interest arrangements. If you are subject to RMDs, a QCD can satisfy some or all of your RMD while helping avoid income based phaseouts or higher Medicare premiums. Start early because custodians have processing timelines, and keep the charity’s receipt even though you will not claim a separate charitable deduction for a QCD. Ed Slott and Company, LLC


7) Review distributions from nongrantor trusts, including the 65‑day rule

Nongrantor trusts reach the top federal bracket quickly. In 2025, trusts and estates pay 37% over $15,650 of taxable income, and the 3.8% NIIT for trusts also starts once AGI exceeds $15,650. That makes distribution timing worth a look.


Begin with distributable net income (DNI). Capital gains are generally excluded from DNI unless the governing instrument or local law allocates them to income, or the fiduciary follows a reasonable and consistent policy to treat them as part of distributions. If a distribution aligns with the trust’s purposes and beneficiaries are in lower brackets, paying out DNI before year end can reduce the family’s combined tax.


You also have a grace period: amounts paid within the first 65 days of 2026 can be elected to count as paid on December 31, 2025. Keep California sourcing in mind when beneficiaries are in different states. IRS


8) Make sure beneficiary designations and titling match your plan

Accounts and policies often move more wealth than a will or trust, so year end is a good time to confirm the paperwork matches your intentions.


Review primary and contingent beneficiaries on retirement accounts, annuities, and life insurance. Check transfer on death (TOD) or payable on death (POD) designations on taxable accounts, and confirm how joint accounts are titled. Make sure the “who gets what” on these forms lines up with your current estate plan, including any nongrantor trusts you are funding.


In California, layer in community property rules and any separate property you brought into the marriage or inherited. If you have made large gifts to irrevocable trusts, confirm who is trustee and how successor trustees are named so there is a smooth path if you become incapacitated. Coordinate changes with your attorney so you do not accidentally undo carefully drafted trust provisions.


(If you rely on Crummey style withdrawal rights for annual exclusion gifts, continue to send and document notices as before, but that process can live in your trust administration checklist rather than as its own planning “move.”)rushforthfirm.info


9) Consider larger lifetime exemption gifts where appropriate

For families facing potential estate tax or holding assets with meaningful upside, using part of the lifetime exclusion can remove future growth from the taxable estate. The basic exclusion in 2025 is $13,990,000 per person; GST exemption matches.


Appraisals and legal work take time, so start early if this is on your list. California does not impose a separate estate tax, but property tax and community property rules can affect what, when, and how you transfer. Weigh basis tradeoffs: gifted assets do not receive a step up at death. IRS


10) Pull your advisors together and document a 2026 plan

The most powerful move is often to connect the dots. Before the year closes, schedule a short check in with your CPA, estate planning attorney, and investment advisor (or at least two of the three). Share the key decisions you have made:


  • Charitable gifts you have already completed or plan to complete

  • Annual exclusion gifts and any larger lifetime transfers underway

  • Trust distributions you plan to elect under the 65 day rule

  • Any expected liquidity events, option exercises, or business sales in 2026


Capture the results on a single page: what you did for 2025, and the top three or four priorities for 2026. This makes it much easier to revisit PTET, private foundation payouts, or new trust strategies next year, and it turns this checklist into a living roadmap instead of a one time exercise.


(If you have a private foundation, note your 5% distribution requirement on this same one pager and confirm with your CPA or foundation administrator that qualifying distributions and expenses will cover it.)


Key 2025 numbers at a glance

  • Standard deduction: $15,750 single, $31,500 married filing jointly, $23,625 head of household. IRS

  • SALT cap: $40,000 (most filers), $20,000 married filing separately; phaseout applies at higher incomes. IRS

  • AMT exemption: $88,100 single/HOH, $137,000 MFJ, $68,500 MFS (phaseouts apply). IRS

  • Estimated‑tax safe harbor: 90% of 2025 tax or 100% of 2024 tax (110% if 2024 AGI >$150,000; $75,000 if MFS). 2025 due dates: Apr 15, Jun 16, Sep 15, Jan 15, 2026. IRS

  • NIIT thresholds (individuals): $200,000 single/HOH, $250,000 MFJ, $125,000 MFS. IRS

  • Trust brackets (2025): 10% to $3,150; 24% $3,150–$11,450; 35% $11,450–$15,650; 37% over $15,650. Trust NIIT trigger: AGI above $15,650. IRS

  • Annual gift exclusion: $19,000 per recipient ($38,000 with gift splitting). IRS

  • Lifetime and GST exemptions: $13,990,000 per person. IRS

  • QCD limit: $108,000 per person; one‑time $54,000 option to certain split‑interest vehicles. Ed Slott and Company, LLC

  • Charitable AGI limits: generally 60% for cash to public charities, 30% for long‑term appreciated property to public charities, 20% for long‑term appreciated property to most private foundations. IRS

  • Appraisal rule for noncash gifts: qualified appraisal required over $5,000; appraisal dated within 60 days before the gift and obtained by the return due date (including extensions); publicly traded stock generally exempt from appraisal. IRS

  • 65‑day rule: distributions made in the first 65 days of 2026 may be elected to count for 2025. Legal Information Institute

Further reading:


Trust income, distributions, and DNI

Gifts and wealth transfer

Charitable giving (DAFs, foundations, QCDs)

California specifics


Disclosures

This material is for informational purposes only and is not tax, legal, or accounting advice. Westlight Wealth is the business name of Rounick Capital Management LLC, a state registered investment adviser in California. Registration does not imply a certain level of skill or training. Tax laws change and may apply differently to your facts. Always consult your CPA and attorney. Investing involves risk, including loss of principal. Charitable organizations and donor advised fund sponsors have their own policies and deadlines. Contact us for current information and personalized recommendations.

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Disclaimer: This post is for educational purposes only and does not constitute investment advice. Investments involve risk, including loss of principal. Always consult a qualified financial advisor about your specific situation.

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