New York Estate Planning & Elder Law Blog
Happy New Year to all!
There have been significant changes in the law in a number of areas as of January 1, 2023.
The gift tax exclusion, which many people still think is $15,000, is now $17,000, up from $16,000 in 2022. Each person may give up to $17,000 to as many people as they want to without incurring any Federal gift tax liability and without using any of their Federal estate tax exemption at death.
Speaking of the Federal estate tax exemption, that has been raised from $12,060,000 to $12,920,000. Since the exemption amount is adjusted for inflation, and inflation was high in 2022, there was a large jump. Same for the New York estate tax exemption which jumped from $6,110,000 to $6,580,000.
The higher Federal exemption is due to tax reform initiated by President Trump commencing in 2016. Fiscal restraints required that the higher Federal exemption expire after ten years. At the end of 2025 then the Federal exemption is slated to return to New York levels. Since you can use any of your now almost $13,000,000 per person as a tax-free gift while you are living, many savvy clients have moved and are continuing to move family wealth to trusts for their children. Often, the parents choose to maintain control of these trusts, and they not only get the assets out of their estate while the getting is good, they also get all of the growth on those assets out of their estate.
Medicaid rates have changed so that an individual who needs care, either at home or in a nursing facility, may keep up to $28,133.00 in assets. If one spouse is at home, and the other spouse is in a nursing home, the spouse at home may keep up to about $150,000 in assets. The value of the home, up to $1,033,000 is exempt from Medicaid if a spouse is living there (while the other is in a facility) or for an individual receiving Medicaid for home care.
Finally, the age at which an individual must take their IRA required minimum distribution has been raised from age 72 to 73.