5 Reasons Why a Gifting Strategy Can Help You Avoid New York Estate Tax

April 19, 2022
Alec Borenstein, Esq.

In New York, you can reduce your estate tax liability significantly when you establish a gifting strategy through your estate. Gifts are becoming exceptionally popular methods of enhancing your tax savings and preserving your assets after you pass away.

 

Assets you set aside for your heirs are subject to an estate tax (for 2022, the New York estate tax exemption is $6,110,000) depending on how much money and equity are transferred into their names. A gifting strategy, however, can help you avoid an estate tax, and here are five reasons why:

Reason #1 – Eligibility for Government Assistance

Gifting can help significantly reduce your estate tax liability. However, it can potentially create problems for family members who require eligibility for Medicaid and other government programs. A reliable estate planning attorney can help you establish a special trust that gifts assets to beneficiaries without affecting their eligibility.

Reason #2 – Charitable Deductions

Charitable deductions will reduce the value of your estate, which in turn will reduce your estate tax liability. This allows you to contribute to non-profit organizations and charities of your choice. Other common examples of charitable deductions include gifts made to volunteer services, churches, research institutes, and more.

Reason #3 – New York “Claw Back" Laws

You should create a gifting strategy sooner rather than later. That’s because New York also has “claw back” laws where gifts made within three years of your death are subject to estate taxes. This means that you can’t avoid taxes by simply gifting all of your assets on your deathbed, and you’ll need to have a plan in place ahead of time.

 

Reason #4 – The Estate Tax Exemption Threshold

The state of New York set the estate tax exemption threshold at $6,110,000 in 2022. In other words, if your estate exceeds this amount, your executor will need to file a New York State estate tax return. But again, when you create a gifting strategy with your estate plan, you can easily avoid paying the taxes.

Reason #5 – Lifetime Gifts

Lifetime gifts are an incredibly effective tax strategy for New Yorkers with sizeable estates. The annual gift tax exclusion allows you to give away $16,000 per recipient, ultimately removing financial appreciation from your estate. It’s also worth noting that you can provide individual gifts of up to $16,000 to as many people as you desire.

Avoiding Tax Liability with Estate Planning Services

Regardless of your financial standing, you should consider contacting an estate planning attorney to protect your assets. Even if you already have a plan in place, making a few crucial updates certainly won’t hurt you. You’ll also likely benefit from a gifting strategy, especially when you can implement it as soon as possible.  

 

Here at Borenstein, McConnell, & Calpin, we ensure that New York and New Jersey families can prepare for the future. We provide you with the tools to construct an estate plan that provides financial security and other protections for your loved ones after you pass away. Schedule a consultation with us today, and we can immediately begin devising a plan that accommodates your needs.

Getting in touch

* indicates required

Want to know more about creating an estate plan or the probate process?

You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at alec@bmcestateplanning.com. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

About us

Borenstein, McConnell & Calpin, P.C. is a Wills & Estate Planning law firm serving Central and Northern New Jersey, as well as New York City. We strive not only to give you a great client experience, but to become your trusted adviser for life. To reach Alec, please send an email to alec@bmcestateplanning.com.

NJ Offices:
155 Morris Avenue, Suite 201
Springfield, NJ 07081

3 Werner Way, Suite 230
Lebanon, NJ 08833

NY Office:
4607 Fort Hamilton Parkway
Brooklyn, NY 11219