What is the best way to gift money to adult children?

A one-time or occasional cash gift is best handled by staying at or under the annual gift tax exclusion (currently $19,000 per recipient per year, or $38,000 if a married couple splits the gift), which reports nothing and uses none of your lifetime exemption. Larger transfers can still work well, but they cross into gift tax filing territory, and that's where valuation matters.

If you're gifting cash, the amount is simply its face value on the date of the gift, so there's no valuation question. Non-cash gifts (business interests, real estate, closely held company shares, or other property) are different: the IRS requires you to establish fair market value as of the date of transfer, and for amounts above the annual exclusion, that value must be documented and reported on Form 709. This is where a USPAP-compliant gift tax appraisal protects you: a well-supported valuation is what stands up if the IRS questions the number later, and undervaluing a gifted asset can trigger penalties well after the fact.

Some practical points worth building into your plan:

• Direct payments of tuition or medical expenses to the institution or provider are unlimited and don't count against your annual exclusion or lifetime exemption at all.
• Gifting to both a child and their spouse effectively doubles what you can move out of your estate each year without using lifetime exemption.
• Amounts above the annual exclusion reduce your lifetime gift and estate tax exemption rather than triggering immediate tax, but they still require a Form 709 filing and a defensible valuation for non-cash assets.

For gifts involving a business interest, minority stake, or other complex asset, it's worth requesting an appraisal before you file, since the valuation date and methodology directly affect how much of your lifetime exemption the gift consumes.