For 2024, the exemptions for estate taxes rise to 6.94 million for New York estate taxes, and to 13.61 million for Federal estate taxes. The annual gift tax exclusion rises to $18,000. If your estate is, or may become, greater than the New York threshold, early intervention can avoid the hefty New York estate taxes, which start at over $500,000. Some of the techniques are (1) setting up two trusts, one for husband and one for wife, and using them to double the New York exemption, (2) gifting out so much of the estate so as to reduce it below the New York exemption, at least three years before the death of the donor, and (3) using the “Santa Clause” providing that the amount over the threshold be donated to a charity or charities of your choosing so as to reduce the estate to no more than the exemption.
For Medicaid, the house is an exempt asset so long as a spouse is residing there, up to $1,071,000 of equity for 2024. Seeing as over 80% of nursing home residents do not have a spouse, it is better to plan ahead with a Medicaid Asset Protection Trust (MAPT) to get the five year look-back for nursing facility care. In that case, the house would be protected by the trust rather than the unreliable spousal exemption. Unless your other assets have been protected by the MAPT, an individual may keep only $30,182 and a spouse can keep up to $154,140.
The major change to Medicaid is the often-delayed imposition of the new two and a half year look-back for home care, commencing April 1, 2024. Previously, there was no look-back for home care. This resulted in people not having to worry about getting home care until they actually needed it. With the law change, the MAPT now becomes far more important as a tool to qualify you for home care than to simply protect your assets from a nursing home. Assets will have to be moved into the MAPT years ahead of time if you want to be able to afford to stay in your own home and get home health aides for assistance with the activities of daily living, should the need arise.