How Securities-Backed Lending Can Support Smarter Intergenerational Gifting

IN THIS ARTICLE

• Why More Families Give Earlier
• Funding a Meaningful Gift
• Approach to Liquidity
• Long-Term Family Impact
• Wealth Transfer
• Beyond the Numbers

The Great Wealth Transfer — the multi-decade shift of trillions of dollars from Baby Boomers and the Silent Generation to younger generations — is reshaping how affluent families think about intergenerational gifting. Rather than waiting for assets to pass through an estate, many are exploring "live inheritances" and intentional gifting to help children and grandchildren achieve important financial goals.

Whether helping fund a first home, support a business venture, pay for education or establish long-term savings, many families want to share wealth while they can witness the impact. Yet much of that wealth is often tied up in investment portfolios they prefer not to sell.

That’s where thoughtful liquidity planning can become an important part of a broader financial legacy strategy.

Why More Families Are Choosing to Give Earlier

For many families, the traditional wealth transfer playbook no longer aligns with modern realities.

I've had conversations with families who realized their children may not inherit meaningful assets until their 60s or 70s. By that point, many major life expenses — buying a home, raising children or building a career — have already occurred. That realization is causing some families to rethink whether a portion of their wealth could create a greater impact if shared earlier.

Research from Empower¹ highlights the potential benefits of shifting wealth earlier in life. The study found that 37% of Americans ages 18–34 would use a live inheritance to help purchase a home or pay down a mortgage, while 33% would use the funds to eliminate personal debt.

Beyond the practical benefits, many families value the opportunity to see the impact of their generosity firsthand rather than waiting for wealth to transfer through an estate.

Additionally, live inheritances can offer estate planning advantages. Assets transferred during life may be removed from the taxable estate, along with any future appreciation those assets generate. For families concerned about estate taxes, that distinction can become increasingly meaningful over time.

The Challenge of Funding a Meaningful Gift

While the desire to give is often straightforward, funding that gift can be more complicated.

I’ve worked with wealthy families who want to help a child purchase a first home or start a business, but much of their wealth was invested in long-term holdings that had accumulated substantial gains.

One case illustrates this clearly: a couple sold their business for $20 million and spent months implementing a diversified investment strategy. When they later decided to help their adult son purchase a home, selling appreciated investments would have triggered meaningful capital gains taxes and disrupted their investment plan. Instead, their advisor recommended borrowing against a portion of their portfolio, allowing them to access liquidity while remaining invested.

Their situation highlights a common challenge for affluent families: How do you support family members today without disrupting the portfolio you've spent years building?

A Different Approach to Liquidity

One potential solution is a securities-backed line of credit (SBLOC), sometimes referred to as a portfolio line of credit. Rather than selling appreciated investments, eligible investors may be able to borrow against taxable investment portfolios to access liquidity while maintaining their long-term investment strategy.

For investors evaluating an SBLOC versus selling appreciated assets, the decision often comes down to balancing liquidity needs, tax considerations and long-term investment objectives. For some families, borrowing against eligible investments may provide a way to access liquidity, support loved ones and remain invested in a long-term strategy. In that way, an SBLOC can serve as both a liquidity solution and a tool for proactive, tax-aware gifting.

Of course, borrowing is not risk-free. Interest costs, market fluctuations and repayment obligations must all be considered carefully. But for some families, securities-backed lending can create a level of flexibility that traditional approaches cannot provide.

Turning Liquidity Into Long-Term Family Impact

The most effective strategies connect liquidity planning to larger family objectives.

Some families transfer wealth gradually over time through annual exclusion gifts. For 2026, the annual gift tax exclusion allows individuals to give up to $19,000 per recipient without using any portion of their lifetime gift tax exemption, while the federal gift and estate tax exemption is $15 million per individual².

Others establish trusts to provide structure and long-term stewardship for future generations. For some families, an SBLOC may support trust funding by providing liquidity without requiring the sale of investments. Because trust strategies involve important tax and estate-planning considerations, investors should consult qualified legal and tax professionals before implementing any approach.

Families may combine annual exclusion gifts, trust funding strategies and Roth IRA contributions for younger family members as part of a coordinated wealth transfer approach.

As I often tell clients, time is one of the most powerful assets younger investors possess. Someone who begins funding a Roth IRA in their 20s may have 50 or more years for those assets to potentially compound. In many cases, providing a young family member with an early start may be more valuable than providing a larger inheritance much later in life.

Wealth Transfer Is a Team Sport

One of the biggest misconceptions about wealth transfer planning is that it’s primarily an investment decision.

As I often remind clients, achieving a successful outcome requires a team approach. Attorneys, accountants, trustees and advisors each play important roles, making coordination essential.

Looking Beyond the Numbers

Intergenerational gifting is about more than financial efficiency.

In my experience, the most meaningful conversations families have about wealth are rarely about investment returns. Instead, they focus on bigger questions: What opportunities should this wealth create? How can it help future generations? And what legacy do we hope to leave behind?

The answers will look different for every family.

But as The Great Wealth Transfer continues to evolve, many investors are discovering that waiting may no longer be their preferred strategy. With thoughtful planning and the right guidance, it's possible to support loved ones today while preserving long-term financial objectives and creating a lasting impact.