Long Island estate planning attorney Seth Schlessel (https://www.schlessellaw.com/how-does-new-york-state-gift-tax-work/) has released a detailed and timely article titled “How Does New York State Gift Tax Work?” Through Schlessel Law PLLC, Schlessel provides an in-depth explanation of how gift taxation functions at the federal level, the absence of a New York state gift tax, and the implications of the state’s three-year clawback rule. This article serves as a valuable resource for individuals looking to understand how gifting can impact their estate planning strategies under current tax laws.

The Long Island estate planning attorney makes it clear that although New York does not impose its own gift tax, residents must still be aware of federal gift tax obligations. He highlights the 2025 federal annual gift tax exclusion amount of $19,000 per recipient and discusses how gifts above this threshold need to be reported using IRS Form 709. Additionally, he explains the lifetime federal gift and estate tax exemption, which stands at $13.99 million in 2025. Seth Schlessel’s article offers readers practical knowledge on how to manage and report their gifts, minimizing the risk of incurring penalties.

The Long Island estate planning attorney also emphasizes the importance of timing when it comes to gifts. While New York lacks a direct gift tax, its three-year clawback provision means that gifts made within three years before a person’s death are added back into the estate for the purposes of calculating state estate tax. This rule could have significant tax consequences, especially for individuals with estates near or above New York’s exemption threshold of $7.16 million in 2025.

“New York state does not require residents to pay a gift tax at the state level, however, there are federal gift taxes and other limitations, such as the implications of the Estate Tax Exemption Sunset, that you must be aware of when trying to give assets to beneficiaries in New York,” the article states.

Seth Schlessel explains how married couples may benefit from exclusions that permit them to give larger tax-free gifts. For instance, couples may gift up to $38,000 per recipient in 2025 by electing gift splitting. Additionally, he points out that certain transfers are not subject to federal gift tax at all, such as direct payments for medical and educational expenses or gifts to spouses who are U.S. citizens.

The article also addresses the potential impact of the upcoming estate and gift tax exemption sunset in 2026, when the current federal exemption is expected to decrease to approximately $7 million. This upcoming change creates an incentive for individuals to consider making larger gifts while the higher exemption remains in effect. Schlessel encourages early planning and review of estate documents with a Long Island estate planning attorney to ensure alignment with future legal and financial changes.

Seth Schlessel discusses several planning strategies, including the use of trusts to facilitate tax-efficient gifting. Tools such as Irrevocable Life Insurance Trusts (ILITs), Grantor Retained Annuity Trusts (GRATs), and Crummey Trusts allow for controlled distribution of assets while reducing exposure to estate taxes. He explains that these mechanisms can offer both tax advantages and asset protection, particularly when structured properly under New York law.

The article outlines how the so-called “estate tax cliff” in New York could drastically affect estates slightly over the exemption threshold. In these cases, Schlessel recommends considering tools like credit shelter trusts, particularly for married couples, to preserve tax benefits and avoid unnecessary taxation upon the death of the surviving spouse.

Throughout the article, Seth Schlessel underscores the importance of tailoring estate plans to individual circumstances. Factors such as citizenship status, marital situation, and asset type all play a role in determining the most effective approach. Whether considering small annual gifts or larger wealth transfers, consulting with a Long Island estate planning attorney can help clarify obligations and reduce unnecessary tax burdens.

This new resource by Schlessel Law PLLC is not only timely but forward-looking, preparing readers for the significant legal shifts expected by the end of 2025. It urges individuals and families to act now in order to take advantage of current laws before exemption thresholds tighten and tax exposure increases.

For those looking to protect their financial legacy, now is an opportune time to assess current estate plans, consider strategic gifting options, and determine whether trust structures can help reduce exposure to federal and state estate taxes. With guidance from Seth Schlessel, Long Island residents can take informed steps toward securing their wealth for the next generation.

About Schlessel Law PLLC:

Schlessel Law PLLC provides estate planning services throughout Long Island. Led by Seth Schlessel, the firm helps individuals and families develop personalized plans to manage asset distribution and minimize tax obligations. The firm supports clients with planning strategies that align with current laws and individual financial goals.

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Phone: (516) 574-9630
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City: Mineola
State: New York 11501
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Website: https://www.schlessellaw.com/