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Your analysis is correct:
you can give away money during your lifetime without incurring New York estate tax at your death.
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"The current (and possibly temporary) federal gift tax exemption of $5 million creates a great planning opportunity for New York estate tax purposes for those taxpayers with the inclination to make large lifetime gifts to their heirs, including "deathbed gifts" made immediately prior to death.
To illustrate the point, a New Yorker with a taxable estate of $6,000,000 would pay a New York estate tax of $510,800, whereas a New Yorker who makes lifetime gifts of $5,000,000 and dies with a taxable estate of $1,000,000 would pay a New York estate tax of only $33,200, a savings of $477,600."
Of course, you must be willing to give up control when you gift. Any interest of the decedent in the property would still be included in the estate. A trust is often preferable to an outright gift to the individual if use of the funds is a potential issue.
Please ask if you need more discussion or clarification.