Year-End Gifting and Your Santa Clause

The firm team at our Holiday lunch. From Left to Right, Shayanne Washington, Dafne Polanco, Michael Greenberg, Tom Fowler, and Chelsea Alvarez.

Keep Your Family and Favorite Causes on the Nice List

As the year draws to a close, there’s still time to take practical steps to reduce your taxable estate and give gifts to loved ones. You can make annual gifts up to $19,000 per person ($38,000 for married couples) before the end of the year. These gifts do not count toward your estate and can help reduce potential estate tax exposure.

For gifts or charitable giving above that level—or to formally incorporate a Santa Clause—it’s best to set up an appointment in the new year. That way, you can plan thoughtfully without adding holiday stress.

_____

Ho Ho Ho — Meet the Santa Clause

Every holiday, Santa makes a list: who’s naughty, who’s nice, and who gets the gifts. In estate planning, you have your own “Santa Clause”—where you spell out your wishes for who should receive what. And yes, legal professionals actually use this term in a playful way!

_____

Understanding the NY Estate Tax Cliff

New York’s estate tax has a sharp cliff. For 2025, the basic exclusion is $7.16 million. Estates under this exclusion amount face no tax, but if your estate exceeds the cliff (5% above the exclusion, $7.518 million), estate taxes jump to double-digit rates on the entire estate.

In 2026, the basic exclusion rises to $7.35 million, with the cliff at about $7.7175 million (5% above). If your estate is just above the taxable level, you can use the Santa Clause to direct amounts above the cliff to your favorite charities. This strategy reduces taxes while leaving your loved ones and causes you care about well provided for.

_____

The Naughty List: NY Estate Tax Cliff in Action

2025 examples:

• Estate of $7.15 million → no New York estate tax; family keeps it all

• Estate of $7.6 million → crosses the cliff; taxes apply to the full estate, leaving heirs with less than at $7.15 million

2026 examples:

• Estate of $7.35 million → no New York estate tax

• Estate of about $7.72 million → crosses the cliff, entire estate taxed

Even a small amount above the cliff can mean hundreds of thousands in extra taxes.

_____

Step 1: Take Action Before Year-End — Annual Gifting

If your estate is approaching the cliff, you can reduce taxable value before the calendar flips:

• Gift up to $19,000 per person per year ($38,000 for married couples) to children, grandchildren, or other loved ones

• These gifts don’t count toward your estate and gradually reduce its taxable size

• No gift tax return is required for these annual gifts

• Think of it as spreading small gifts throughout the year — keeping your family on the nice list while lowering potential tax exposure

_____

Step 2: Use the Santa Clause for Charitable Giving

For estates just above the cliff threshold, your Santa Clause is a powerful tool:

• You can structure your estate plan so that anything above the cliff threshold goes to your favorite charities or causes, rather than being taxed

• Charitable giving reduces the taxable portion of your estate, leaving more for loved ones and causes you care about

• Many people underestimate their total estate value — planning now ensures you don’t unintentionally trigger the cliff and lose a significant portion to taxes

Think of it as placing gifts under the tree for your favorite causes, ensuring your legacy reflects your values while protecting your family’s inheritance.

_____

The Gift of Planning

By combining year-end gifting with a strategically crafted Santa Clause, you can:

• Reduce your taxable estate now with small gifts to loved ones

• Maximize charitable gifts for causes you care about, especially for amounts above the NY estate tax cliff

• Protect your heirs from the New York estate tax cliff

With careful planning, your “nice list” becomes real gifts—for both your family and the causes closest to your heart—without the state tax bite taking a lump of coal from your legacy.

_____

Next Steps:

• Make your annual gifts before December 31st

• Schedule a post-holiday appointment to design your Santa Clause and charitable giving strategy for amounts above the NY estate tax cliff

Warm Holiday Wishes: From our family to yours, may your season be merry, your estate planning smooth, and your New Year bright!

Out in the Community

Volunteering is another way to give back.  For example, I enjoy my work as the Chair of the Legal Committee of the Alzheimer’s Association, New York City Chapter. I am shown below along with other volunteers at the organization’s recent volunteer appreciation event.