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** This article has been revised from its original version which was published on March 18, 2020.
One of the most common questions we hear as New York elder law attorneys and estate planners is, “How much can I give in gifts without owing any taxes?”
The Quick Answer
The annual exclusion from federal gift taxes in 2023 is $17,000 per donee, and there is no New York State gift tax. This means that if you are a New York resident and give $17,000 or less to one or more people or entities, those gifts won’t be subject to any gift tax (federal or state).
Although this answer is short and to the point, it doesn’t provide the full picture. There are many broader things to consider when gifting assets. A better question might be how it affects other long-term estate planning goals. One thing we typically advise clients to think about before making gifts is Medicaid eligibility. You don’t want to jeopardize a critical resource for long-term care expenses.
A common misconception is that if you give gifts equal to or less than the annual exclusion for federal gift tax, the gift will be exempt from Medicaid’s five-year-look-back period. This is WRONG.
The annual exclusion for gift tax is a tax rule and doesn’t apply to the Medicaid rules in this context.
Even if you gifted money to a loved one for $17,000 or less in value, Medicaid will still count it as a transfer that could make you subject to a transfer penalty period for Chronic Care Medicaid (nursing home) should you apply for it within five years from the date the gift is made. This is why speaking with an experienced elder law attorney before making gifts is extremely important. Long-term care planning can evaluate your financial resources and determine if Medicaid benefits may be necessary for the future. If so, gift-giving or asset transfers must be made carefully.
Russo Law Group, P.C. Can Help
Our experienced New York elder law attorneys will be able to help you get through the complex Medicaid application process and consider tax rules and regulations. We strategically accomplish your goals while mitigating the impact on your tax liability and long-term care planning. Gift-giving can be done, but timing is critical.
When creating an estate plan, our experienced New York elder law attorneys discuss gift-giving, potential needs for long-term care, and Medicaid rules. The knowledgeable and compassionate team at Russo Law Group, P.C., provides professional services and advice regarding estate planning goals and helps you determine which combination of legal documents is right for your situation. We can develop a custom strategy of timely asset transfers to ensure qualification for Medicaid. Take advantage of our comprehensive website as well as our free seminars and webinars to learn more about how Russo Law Group, P.C. provides peace of mind. Please contact our law firm to speak with one of our experienced estate planning and elder law attorneys today at 1 (800) 680-1717.