With the holiday season in full swing, many parents and grandparents are deciding whether to make significant monetary and/or property gifts to their children, grandchildren and other loved ones. Westchester County elder law attorneys Anthony J. and Lauren C. Enea of Enea, Scanlan & Sirignano LLP in White Plains and Somers recently shared their insights on gifting and the potential tax implications.
“For those considering making a sizable gift, the possibility that the existing federal estate and gift tax exemption may be reduced from $12.92 million to $6 million as of Jan. 1, 2026, underscores the urgency and significance of taking proactive steps before this critical window closes,” said Anthony Enea, the firm’s managing partner, who has dedicated nearly 40 years to the rights of seniors, the disabled and their families. “Additionally, if one’s estate is near the New York estate tax exemption of $6.58 million for 2023 ($12.92 million in Connecticut), utilizing the federal gift tax exemption is a valuable tool in reducing the possibility of an onerous New York estate tax as well.”
Currently, a person can gift up to $17,000 per recipient per year free of any gift taxes ($18,000 in 2024). Even above that threshold, filing a federal gift tax return doesn’t necessarily mean that the gift giver will have to pay any gift taxes. He or she will be able to apply his or her exemption for federal estate and gift taxes to the amount of any gift above the $17,000 or $18,000 in 2024 per recipient in any calendar year.”
“If a single, unmarried person makes a gift of $100,000 in 2023 to his or her son or daughter, $17,000 of the gift is tax free and $83,000 would be subtracted from the gift giver’s federal exemption amount of $12.92 million for federal estate and gift taxes,” said Lauren Enea, a senior associate at the firm. “In the case of a married individual, the spouse’s participation in the gift would reduce the taxable amount of the gift to $66,000, with only $17,000 deducted from the lifetime exemption for each donor.”
The $12.92 million federal estate and gift tax exemption ($13.61 million per person in 2024), which expires at the end of 2025 unless made permanent by law, creates an ideal opportunity for individuals to remove highly appreciating assets from their taxable estate. It’s also a way of reducing the assets you own that may be subjected to long-term care costs and future estate taxes.
In addition to the tax implications, another consideration is whether a gift should be made outright or through a trust. This decision often involves a number of factors, such as the age of the recipient, his or her ability to manage financial affairs and spending habits.
“The use of an irrevocable trust agreement is a prudent way of gifting and managing assets for a loved one,” Anthony Enea added. “Unless one is making a relatively small gift and there are no concerns as to the recipient squandering or wasting said monies, an outright gift may not be appropriate. In most other instances, the use of a trust to hold the gift is a much wiser option.”
For more, call 914-948-1500 or visit www.esslawfirm.com.
