How Estate Planning and Tax Season Intersect

Each tax season, individuals review their income, expenses, and any gifts or charitable donations made during the year to determine whether they are owed a refund or have additional tax obligations to the state or federal government. That same process can also help identify whether changes to asset ownership, trusts, or fiduciary roles may create additional tax filing responsibilities.

Tax season is therefore a good time to review how your assets are titled and what types of tax returns may need to be filed. In addition to federal and state individual income tax returns due each April, some individuals may also need to file fiduciary income tax returns for estates or trusts, as well as federal gift tax returns. If you are a business owner, the type of tax return you must file鈥攁nd the filing deadline鈥攚ill depend on the structure of your business.

Trust Tax Returns

Trust ownership can also affect how income is reported for tax purposes. Certain trusts, including revocable living trusts, Medicaid asset protection trusts that are structured as grantor trusts, and other intentionally defective grantor trusts, generally do not file their own income tax returns during the grantor鈥檚 lifetime. Instead, income generated by the trust鈥檚 assets is reported on the grantor鈥檚 personal income tax return, as though the assets were still owned individually. While these trusts may be assigned their own tax identification numbers, trustees should consult with their accountant to determine whether an informational return should be filed.

Other types of trusts, however鈥攕uch as irrevocable non-grantor trusts鈥攁re considered separate tax entities and may be required to file their own fiduciary income tax returns. Because trust taxation can vary depending on the type of trust and how it was structured, it is important for trustees and grantors to confirm their filing obligations with an accountant or attorney.

Gift Tax Returns

In addition to your individual income tax return, you may also need to file a federal gift tax return if you made gifts exceeding the annual federal gift tax exclusion amount. For both 2025 and 2026, the annual exclusion is $19,000 per recipient. Gifts above this amount must be reported on a federal gift tax return. While a tax is unlikely to be owed in most situations, these gifts reduce the total amount that can be transferred tax-free during your lifetime. In 2025, the federal lifetime gift and estate tax exemption was $13,990,000 per individual, and in 2026 the exemption increased to $15,000,000.

Other Tax Considerations

Additional tax responsibilities may arise if you are serving as the executor or administrator of an estate, or as the trustee of a trust established by someone who has passed away. If an estate or trust generates more than $600 in income during the year, the fiduciary may need to file a federal fiduciary income tax return. Because filing thresholds and rules can change over time, it is important to confirm the current requirements each year with a qualified legal and tax professional. When distributions are made to beneficiaries, those beneficiaries should receive a Schedule K-1 (Form 1041) reflecting their share of the income, which must be provided to their accountant when preparing their personal tax return.

Take Time to Evaluate Your Estate Plan This Tax Season

Tax season can feel overwhelming, but it also provides a useful opportunity to review the financial roles you hold鈥攚hether as an individual taxpayer, trustee, or executor鈥攁nd to ensure you are meeting any tax obligations associated with those roles. By taking the time each year to review these responsibilities, you can help ensure that both your tax filings and your estate plan remain aligned.

Medicaid Income and Asset Levels 2026

By law, the allowable income and asset limits for Medicaid are set at 138% of the Federal Poverty Level (FPL).

In 2026, a single applicant must have less than $33,038 in countable assets, an increase from $32,396 in 2025. For married couples, the resource limit is $44,796. Furthermore, the monthly income limit is $1,836 per month for single applicants, and $2,489 per month for married couples.

The countable assets consist of cash, bank accounts, stocks, bonds, non-qualified annuities, and cryptocurrency. The primary home is automatically exempt if the applicant鈥檚 spouse, child under 21 years old, or disabled child (of any age) resides there. If a single applicant is the only resident, the home is considered if the equity value is greater than $1,130,000 (in 2026). Homes with equity valued below this threshold are excluded.

Tax-deferred assets (鈥渜ualified accounts鈥�), such as retirement accounts and IRAs, are exempt, so long as the applicant is taking minimum distributions 鈥� that is, they must be in 鈥減ayout status.鈥� However, the value of these minimum distributions is counted towards the applicant鈥檚 monthly income limit.

Is There a Community Medicaid Lookback in NY?

New York does not have a 鈥渓ookback鈥� period for Community Medicaid programs, though the state plans to implement one in the future. Though Institutional Medicaid (i.e. nursing home care) applications have a 60-month lookback period, where the state closely scrutinizes all asset transfers to ensure that none were gifted or sold for less than fair market value, Community Medicaid applications do not require such scrutiny. While the New York State budget in 2020 included a provision for a 30-month lookback period for Community Medicaid, it is unclear when the state intends to impose this requirement.

What if Your Assets are Above the Threshold?

Prospective Community Medicaid applicants with assets over the threshold can transfer their excess to an Asset Protection Trust, with the help of an estate planning attorney, and are eligible to apply in the following month. If their income is over the limit, these applicants can take advantage of a pooled income trust (鈥淧IT鈥�), which can shelter the excess. The PIT is a type of supplemental needs trust administered by an organization with an underlying charitable cause. With a PIT, the Medicaid recipient can keep their income level below the required threshold and keep the excess in trust. Once there, the income can be made available to the recipient to pay expenses for their own benefit, such as rent, utilities, food and clothing.

Medicaid Planning is Key

Though the state has not yet imposed a lookback period for Community Medicaid applicants, New Yorkers interested in the program should take precautions to protect their assets ahead of time. Consulting with an experienced attorney, especially while you are healthy, can minimize exposure of your assets and ensure that your enrollment in the program is seamless.

By Frank Oswald, Esq.

Frank Oswald, Esq. is an associate attorney at 明星黑料, P.C. focusing his practice areas on Trusts and Estates. 明星黑料, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

How Deeds and Medicaid Can Intersect

When applying for nursing home Medicaid, the state reviews all financial transactions made within the five years (60 months) prior to the application. This is known as the 鈥�look-back period.鈥� If you transferred assets for less than fair market value during that time, Medicaid treats the transfer as a gift.

Adding your son to your deed without receiving full market value in return is typically considered a partial gift of your home. If the transfer occurred within five years of applying, Medicaid may impose a penalty period during which it will not pay for your nursing home care. The length of the penalty is calculated by dividing the value of the gifted portion by the state鈥檚 average monthly nursing home cost. Importantly, the penalty period does not begin until you are otherwise eligible for Medicaid and residing in a nursing home.

There are limited exceptions to the five-year rule, which include but are not limited to transfers to a spouse, a disabled child, or a 鈥渃aretaker child鈥� who lived in the home for at least two years and provided care that delayed nursing home placement. These exceptions are narrowly defined and require documentation.

Other Potential Issues Beyond Medicaid

Beyond Medicaid concerns, adding a child to a deed may expose the home to that child鈥檚 creditors, divorce proceedings, or financial difficulties, and you may lose full control over the property. Additionally, there are certain tax implications when transferring property that can negatively affect you or your child. Lastly, the way your property is titled鈥攚hether as tenants in common or joint tenants with rights of survivorship鈥攃an lead to unintended consequences, potentially undermining your estate planning objectives or leaving some or all of the property subject to Medicaid estate recovery claims.

Speaking With an Estate Planning Lawyer Can Help You Implement the Right Strategy

While no one can predict future health needs, planning ahead is critical. Strategies such as a properly drafted Medicaid Asset Protection Trust, created at least five years before care is needed, may protect your home without exposing it to the risks associated with co-ownership. Consulting a Medicaid-conscious estate planning attorney is the best way to safeguard your assets and avoid future complications.

What Happens If You Die Without an Estate Plan and Have Children?

If you are married and have children when you pass away, but do not have an estate plan, your spouse will be entitled to the first $50,000 of your estate and then 50% of the remainder goes to your spouse and the other 50% of the remainder is split equally amongst however many children you have. If you and your spouse are joint owners of assets or your spouse is a beneficiary of your individually owned assets, this formula does not apply, and assets will be automatically passed to your spouse upon your death.

What About Your House?

If the home in which you and your spouse reside is in your sole name when you pass away, your spouse may have to sell the home to give your children the inheritance to which they are entitled or buy out your children鈥檚 interest. To prevent these complications, you can create a will or trust which devises your home or other real property to your spouse. Even if your children decline to accept their share of the property or its value – if the share is worth more than the federal gift tax exemption, your children will have to file a gift tax return. Joint ownership amongst spouses is typically the most seamless and cost-effective option because it does not require probate, signing and recording a new deed to transfer the property from the deceased spouse to the surviving spouse, and does not require the filing of gift tax returns.

When Subtrusts May Play a Role

Some circumstances warrant the creation of a subtrust for your spouse to inherit from you within your estate plan. Subtrusts can prevent them from losing government benefits they are receiving at the time of your death, provide estate tax planning benefits, or allow your children to ultimately inherit assets after your spouse鈥檚 death which may be especially important in the case of a second marriage.

Don鈥檛 Wait to Get Started On Your Estate Plan

While estate planning can evoke uncomfortable feelings and/or conversations, transparency is crucial, especially amongst spouses and their estate planning attorney. Knowledge is power and transparency is invaluable when it comes to utilizing all your options and establishing a well-tailored legacy.

By Erin Cullen, Esq. and Melissa Doris, Esq.

Erin Cullen, Esq. is an associate attorney at 明星黑料, P.C. focusing her practice areas on Trusts and Estates. Melissa Doris, Esq. is a Partner at 明星黑料, P.C. focusing her practice areas on Trusts and Estates. 明星黑料, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

Who Will Qualify for Medical Aid in Dying in New York?

The statute is carefully limited and highly regulated. To qualify, an individual must be at least eighteen years old, be a New York resident, and have a medically confirmed terminal illness that is incurable and irreversible, with a prognosis of six months or less to live. The individual must also be mentally capable of making informed medical decisions and physically able to self-administer the medication. The law does not apply to individuals who are elderly, disabled, or chronically ill unless they meet the strict definition of terminal illness.

What is the Process of Medical Aid in Dying?

The process for requesting medical aid in dying includes multiple safeguards. A patient must make two oral requests and one written request. At least one oral request must be audio or video recorded to document that the decision is voluntary and free from pressure. The written request must be witnessed by two adults, at least one of whom is not related to the patient and does not stand to benefit financially from the patient鈥檚 death. Two physicians must independently confirm the diagnosis, prognosis, and the patient鈥檚 mental capacity. In addition, the law requires a mental health evaluation by a psychiatrist or psychologist to confirm that the patient is competent to make this decision.

How Long Does the Process Take?

Timing rules are also built into the law. Under normal circumstances, there is a fifteen-day waiting period between the first and second oral requests. Once the medication is prescribed, there is an additional five-day waiting period before it can be dispensed by a pharmacy. These timeframes may be shortened in cases of imminent death, where the attending physician determines that the patient is likely to die or lose the ability to self-administer the medication before the waiting periods would otherwise expire.

The medication must be self-administered by the patient. This means the patient must perform the final physical act, such as swallowing the medication or pressing the plunger of a feeding tube. While others may assist with preparation, no one else may administer the medication on the patient鈥檚 behalf.

What Else Should Families Know About Medical Aid in Dying?

Participation in Medical Aid in Dying is voluntary for healthcare providers. Physicians, hospitals, hospice providers, and pharmacies may choose whether to participate. The law also includes important protections for patients. A death under the statute is not legally considered suicide or homicide, and life insurance and health insurance benefits cannot be denied or altered solely because a person used medical aid in dying. The underlying terminal illness will be listed as the cause of death on the death certificate.

How the Medical Aid in Dying Act Affects Estate Planning

From an estate planning and elder law perspective, the new law also highlights important limitations on advance directives. A health care proxy cannot request medical aid in dying on behalf of a patient. The request must come directly from the individual, and an agent under a health care proxy may not serve as a witness to the written or recorded requests. These restrictions are designed to prevent conflicts of interest and protect patient autonomy.

Medical Aid in Dying represents a significant shift in how New York approaches end-of-life decision-making. As the state moves toward implementation, individuals and families facing serious illness should take time to understand how this new law works and how it fits within their broader medical, legal, and estate planning goals.

By Britt Burner, Esq. and Alma Muharemovic聽 Esq.

Britt Burner, Esq. is the Managing Partner at 明星黑料, P.C. focusing her practice areas on Estate Planning and Elder Law. Alma Muharemovic, Esq. is an associate attorney at 明星黑料, P.C. practice on Estate Planning. 明星黑料, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

When Will the New York Electronic Wills Act Be Effective?

First and foremost, the new legislation has a delayed effective date of 545 days after the Governor enacts the law 鈥� meaning that the law will not be fully effective until mid-2027. New Yorkers considering using an electronic will should be aware of this delayed rollout, and understand that the framework for these wills will not be implemented until the next calendar year. Any purported 鈥渆-will鈥� executed prior to the effective date will not meet the requirements under the statute (and be treated as invalid).

What Are the Requirements for a Valid Electronic Will in New York?

The bill includes several core standards for valid execution. The will must exist as an electronic record, readable as text, at the time that it is signed; it must be in a digital format that is accessible, legible, and contains 鈥渁udit trail data鈥� 鈥� data showing how the document was created, signed and maintained. The person making the will must affix her own electronic signature to the will, or otherwise have another person sign the will on her behalf, in her physical presence and by her direction. Additionally, at least two other individuals must sign the e-will, in the physical or electronic presence of the testator, within thirty (30) days of witnessing the testator鈥檚 signature or acknowledgment. The bill also requires the Will to include specific cautionary language, in a statutorily required format, advising the testator of these validity requirements.

Crucially, the electronic will must be filed with the New York State Unified Court System within thirty (30) days after its execution. This is a strict filing deadline, and if the e-will is not filed within this thirty-day period, it is treated as invalid. Due to this strict deadline, which is not required of paper wills, it is critical that New Yorkers interested in electronic wills work with their counsel to determine that the proper filing protocol is met 鈥� and promptly.

Thinking About Creating an Electronic Will? Reach Out to an Estate Planning Lawyer

Electronic wills are a brave new frontier, and they may provide additional options to New Yorkers for accessibility in their estate planning. However, ensuring that these options fit into your estate plan requires careful thought and reflection. Working with a skilled estate planning attorney is highly recommended to determine the framework that鈥檚 best for you and your family.

By Britt Burner, Esq. and Frank Oswald, Esq.

Britt Burner, Esq. is the Managing Partner at 明星黑料, P.C. focusing her practice areas on Estate Planning and Elder Law. Frank Oswald, Esq. is an associate attorney at 明星黑料, P.C. focusing his practice areas on Trusts and Estates. 明星黑料, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.

What is the Federal Estate Exemption in 2026?

At the federal level, uncertainty surrounded estate tax rules heading into 2026. Before the enactment of the Big Beautiful Bill Act in July 2025, the federal estate tax exemption was scheduled to sunset to approximately $7,000,000 per person, adjusted for inflation, a sharp reduction from the 2025 exemption of $13,990,000. The Act eliminated the sunset and set a new federal estate tax exemption of $15,000,000 per person. While described as 鈥減ermanent,鈥� future legislative changes remain possible.

What is the Federal Annual Gift Tax Exclusion in 2026?

The federal annual gift tax exclusion for 2026 remains at $19,000 per recipient. Gifts above this amount generally require the filing of a gift tax return and reduce the donor鈥檚 lifetime estate and gift tax exemption, though they do not usually result in immediate tax. Careful planning is especially important for larger lifetime gifts.

2026 Medicare Changes

Federal elder law rules also continue to evolve. For 2026, Medicare Part D includes a $2,100 cap on out-of-pocket prescription drug expenses and a maximum deductible of $615, although some plans offer lower or no deductibles. There will also be fewer Medicare Advantage plans available nationwide, with modest premium increases.

What is the New York Estate Tax Exemption in 2026?

New York maintains its own estate tax system, separate from federal law. The New York estate tax exemption for 2026 is projected to be $7,350,000, an increase of $190,000 from 2025.

Does New York Have a Gift Tax?

Unlike the federal system, New York does not have a gift tax. However, certain lifetime gifts can still impact a New York taxable estate. Under current law, gifts made within three years of death are generally pulled back into the decedent鈥檚 New York taxable estate. By contrast, if a decedent survives a gift by more than three years, the value of that gift is excluded from the New York estate for estate tax purposes. This rule makes timing an important consideration for New York residents engaging in lifetime gifting, particularly given New York鈥檚 estate tax 鈥渃liff,鈥� which can result in the taxation of the entire estate if the exemption is exceeded.

Other Changes to Look Out For

Even for estates below the tax thresholds, planning remains critical, particularly for those planning for long-term care paid for by Medicaid. New York residents should monitor updated Medicaid income and asset limits, which affect eligibility for long-term care benefits.

Procedural changes continue in Surrogate鈥檚 Court. Although the Electronic Wills Act has passed the Legislature, it will not take effect until 545 days after being signed by the Governor. As a result, 2026 still requires traditional paper wills for probate. Recent legislation also allows next-of-kin notices to be served by mail, and in some cases by email, helping streamline estate administration.

Regular review of estate plans remains the best way to ensure compliance with evolving laws and personal goals.

For Young Adults

For young adults over the age of 18, you may want to consider getting a Durable Power of Attorney and health care proxy. Whether you are away at college, living on your own, or remain at home determining your next steps, having these documents allows people you trust to look out for your financial and medical wellbeing if something should happen to you and you are unable to decide for yourself.

For Parents

If you are a parent, you should execute a last will and testament to designate a guardian of your children鈥檚 property and person should anything happen to you and your co-parent. This person would have to be appointed by the Surrogate鈥檚 Court to serve as guardian to your child and would have annual reporting obligations. The document should also create a trust for the minor child which can take ownership of your assets after death including your home, life insurance proceeds, 401K monies, etc. It is important to consult the person(s) you nominate as trustee and guardian to make sure that he or she is willing to serve.

For Spouses

If you are married without an estate plan, you should know that a deceased spouse鈥檚 assets do not automatically transfer to the surviving spouse. If you pass away without a Will or Trust in New York state, and you do not have children, all your assets go to your spouse. However, if you are married with children, the first $50,000 goes to your spouse and then the remainder is split 50% to the spouse and 50% to biological or adopted children.

For Unmarried Partners

If you have a long-term partner but are not legally married, it is crucial to include your partner in your estate plan to avoid your next of kin inheriting instead of the person to whom you may be closest. If you and your partner live in a home together, the deed to the property and estate planning documents should be coordinated to plan out whether the survivor has a legal right to ownership of the property, a continued right to live there, or if other plans are contemplated.

For Older Adults and Those With Health Conditions

If you are nearing your more senior years or have a chronic health condition, you may want to consider an estate plan with a focus on asset protection. To apply for in-home care or nursing home Medicaid, your income and assets must be under the threshold determined by the State鈥檚 Department of Health. Irrevocable Trusts can protect assets from being counted as available resources to pay for care. As of 2025, if you need care within your home, there is no look back period, so if assets are transferred out of your name, you can more easily become eligible for in-home care. On the contrary, the asset must be transferred out of your name 5 years prior to seeking assistance with the costs of a nursing facility. Medicaid rules are subject to change and some assets should not be transferred to an Irrevocable Trust. Thus, you should consult an attorney regarding asset transfers.

Let the close of 2025 and the dawning of a new year be a reminder to generate, review, or update your estate plan.

What If I Travel Outside the Country?

Whether your POA and HCP will be honored outside of the country is unpredictable. If you have pre-existing medical conditions and you will be in another country for an extended period, you may want to consult the equivalent to an estate planning attorney in that country.

What If I Spend Long Periods of Time in Another State?

If you鈥檙e a 鈥渟nowbird鈥� or plan to spend periods of time in other states, you may want to meet with a local attorney and invest in a POA and HCP specific to that state. Each state has different laws and different terminology within its legal documents. While your New York estate planning is valid in other states, the ease of use in other states may not be the same. If you use a New York POA or HCP in another state, the format and contents are likely different to what locals are accustomed to.

If you鈥檙e in an out-of-state accident and someone needs to make medical decisions for you, you don鈥檛 want medical professionals scrambling to determine who should be contacted. If you need to pay bills or apply for Medicaid in another state because that is where you were injured or had a medical event, you want your agents to be able to act wherever you might be.

What if I Travel Frequently, But Not Always to the Same State?

If you do not frequent another state enough to execute documents specific to that state, you may want to consider putting your POA on file at your bank in advance of travel, so your agents will be authorized to transact on your behalf if something happens while you are out of state. If you have pre-existing medical conditions, you may want to travel with a copy of your HCP and let someone know where it can be located.

Need Clarity? Talk to an Estate Planning Lawyer

POA and HCP documents are extremely powerful tools for your physical and financial wellbeing. Everyone鈥檚 situation is different, so it鈥檚 important to speak to an experienced estate planning attorney about your specific circumstances, so they can guide you appropriately.

By Erin Cullen, Esq. and Melissa Doris, Esq.聽

Gifting During Life vs. After Death

When you gift your home during life, your child receives your original cost basis, meaning what you paid for the property. If the home has increased in value, your child could face significant capital gains tax if they decide to sell it. Property that passes at death, on the other hand, receives a 鈥渟tep-up鈥� in basis to fair market value at the time of death, often eliminating or greatly reducing capital gains tax for your beneficiaries.

There are also Medicaid implications to consider. Under New York鈥檚 five-year look-back period, transferring your home could make you ineligible for Medicaid coverage if you need long-term care in a nursing facility within five years of the gift. The value of the home is treated as a transfer, which can create a penalty period of ineligibility.

What About Life Estates?

Some parents choose to keep a life estate, which allows them to live in the property for the rest of their lives while giving the remainder to their children. While this preserves the step-up in basis at death, it can make selling or refinancing more complicated because all parties must agree to the transaction. Another concern arises if a child passes away before the parent. Because the child鈥檚 interest as a remainderman cannot be changed once the deed is recorded, ownership may pass to the child鈥檚 surviving spouse or estate, creating unintended consequences for the family.

Other Strategies for Leaving Property to a Child

In many cases, placing the property into a trust or family LLC provides a better long-term result. A Revocable Trust allows you to keep control of your home during your lifetime and transfer it to your beneficiaries without probate. Real estate can also be placed in an irrevocable Medicaid asset protection trust to add protection for Medicaid eligibility.聽 While not the best option for your primary residence, a family LLC can also be useful when several family members will share ownership of a second home or investment property. The LLC owns the real estate, and each member holds a percentage of ownership in the company. This structure helps clarify management responsibilities and makes future transfers easier.

Before transferring real estate to your children, speak with an estate planning attorney and a tax professional. Taking the time to plan now can help preserve your home and prevent future complications for your family.

By Britt Burner Esq. & Alma Muharemovic, Esq.

Britt Burner, Esq. is the Managing Partner at 明星黑料, P.C. focusing her practice areas on Estate Planning and Elder Law. Alma Muharemovic, Esq. is an associate attorney at 明星黑料, P.C. practice on Estate Planning. 明星黑料, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.