For many, estate planning may seem like a relatively simple process comprised of little more than creating a Will. However, this is far from the truth. In reality, there are a number of important considerations you’ll need to make. One such aspect is how you will navigate estate taxes imposed upon your estate. The following blog explores one method for navigating this process, gifting assets, and the benefits it offers. You’ll also discover important information about making these transfers and the importance of discussing your circumstances with a Medina County, Ohio estate lawyer to explore your legal options.
Why Should I Consider Gifting Assets?
One of the primary reasons people begin gifting assets to loved ones before death is to help reduce estate taxes. If you pass away and your estate is over a certain value, which as of 2025 is $13.99 million, you will be subject to federal estate taxes upon your passing. However, by making qualified transfers, you can help reduce the value of your estate to avoid these taxes.
Additionally, gifting assets, if done early enough, can help with Medicaid planning. If you anticipate needing long-term care in the future, you may assume that signing up for Medicaid can help. However, this is a need-based program, and only those with less than $2,000 in assets will qualify. As such, you may “spend down” assets to reduce the overall value of your estate, which can be done through gifting assets. However, you must understand that there is a five-year “look-back” period. As such, any transfers made within five years of applying for Medicaid will be taken into consideration and counted against you.
Is There Anything I Must Consider Before Making Transfers?
Before transferring your assets to loved ones, it’s important to understand that there is an annual gift tax. As of 2025, you are eligible to gift up to $19,000 per beneficiary annually without incurring tax penalties on these transfers. If you are married, this will increase to $38,00 per inheritor.
You should also understand how the gift tax exemption works. The gift tax, which is the same as the current federal estate tax limit, is set at $13.99 million. As such, you can give away up to this amount over the course of your life without having to pay taxes on the transfers. If you are married, this increases to $27.98 million.
For example, if you are looking to reduce the value of your estate, you may gift each of your children $19,000 every year without paying taxes on it or using the lifetime gift tax. However, if you go over that amount, and give a child $25,000 one time, the $6,000 that exceeds the annual gift tax would be counted towards your lifetime exemption.
As you can see, gifting assets and planning for the future go hand in hand. However, this is undoubtedly a confusing and complicated matter, which is why it’s in your best interest to explore your legal options with an experienced estate planning attorney with Krause Law. We understand how difficult these matters can be, which is why we are committed to guiding you through these difficult times. Connect with us today to learn more.
