To many, the idea of gifting assets before death may seem unnecessary. If you have an established will, that may seem like enough. However, there are many benefits to transferring funds before your passing that can help you avoid taxes and plan for the future. If you’re unsure what these are or what you should know before moving assets, you’ll want to keep reading. You’ll also learn about the importance of working with a Nassau County estate planning lawyer during this process.
Why Should I Consider Gifting Assets During My Life Time?
One of the most common reasons why you may want to gift your assets to loved ones is to reduce the value of your estate. When your estate is over a certain value, which, as of 2025, is $13.99 million, your estate will be subjected to taxation by the federal government. It’s important to understand that New York also imposes its own estate taxes on estates valued at over $7.16 million. As such, if you gift assets during the course of your lifetime, you can reduce the value of your estate to avoid the federal or New York state estate taxes. This can help ensure your beneficiaries receive the full assets you wish to leave them.
It’s important to understand that gifting assets can also help you when Medicaid planning. Unfortunately, many assume that Medicaid and Medicare are the same programs, which is far from the truth. In reality, Medicaid is a program that covers those in need of residency at a nursing home or other long-term care facility. This is a need-based program, so only those with less than $2,000 in assets can qualify. As such, if you anticipate needing Medicaid coverage, gifting assets to beneficiaries can help reduce the value of your estate so you can meet the eligibility requirements. However, you should note that Medicaid has a five-year “look-back” period, in which all assets transferred during this timeframe will be considered part of your estate. As such, you’ll need to begin planning early.
What Must I Know Before Making Transfers?
If you want to gift assets, it’s important to understand the implications of doing so before breaking out your checkbook. It’s imperative to understand the annual gift tax is imposed. As of 2025, the federal gift tax is set at $19,000 per beneficiary. As such, you can gift up to $19,000 per recipient annually without incurring any taxes on these transfers.
You should also familiarize yourself with the lifetime gift tax, which is also set at $13.99 million in 2025. This means you can gift up to $13.99 million worth of assets over the course of your life without incurring taxes on any of these transfers. It’s also important to understand that if you stay under the annual gift tax, these transfers will not be counted toward your lifetime exemption.
For example, if you gift your grandchild $30,000 for college, you’ll find that the first $19,000 will not incur taxes. The remaining $11,000 will count toward this amount. However, if you have already exceeded the lifetime exception, the remaining $11,000 will be taxed.
As you can see, there are a number of important considerations you must make if you wish to gift assets to reap the benefits. Ensuring you adhere to the rules and regulations surrounding these matters is critical, as it can help ensure that your estate is handled according to your wishes. If you are ready to begin this process, you’ll want to connect with an experienced estate planning attorney from Barrows Levy PLLC as soon as possible. Our firm understands how difficult these matters can be, which is why we are ready to guide you through this process. Contact us today to learn more.
