The New York State budget passed on April 1, 2014 includes dramatic changes to the state estate and gift tax laws. Bellow is a brief summary of the most important changes affecting New York trusts and estates.  It would be prudent to contact your attorney to discuss how these changes affect your estate plan and whether any action is necessary or desirable.

Increase in Estate Tax Exemption
Since 2001, the federal estate tax exemption amount (the amount of assets that can be passed to heirs without incurring any estate tax), has risen from $1,000,000 to $5,340,000 while New York State’s exemption remained at $1,000,000 per person. Governor Cuomo’s 2014-15 budget bill has raised the New York State estate tax exemption amount to $2,062,500 per person immediately, with increases over the next 5 years so that the state estate tax exemption amount will mirror the federal exemption.

The exemption amounts phase in according to the following:

Individual Dying On Or After:                                Tax Exemption Amount:

  • April 1, 2014 & before April 1, 2015                         $2,062,500
  • April 1, 2015 & before April 1, 2016                         $3,125,000
  • April 1, 2016 & before April 1, 2017                         $4,187,500
  • April 1, 2017 & before January 1, 2019                    $5,250,000
  • January 1, 2019 & thereafter                                    $5,000,000+*

       * Indexed for inflation from 2010

Inclusion of Lifetime Gifts in New York Estate Tax Calculation
Although New York does not impose a gift tax on lifetime transfers (unlike the federal government), the value of gifts made by a New York decedent (i) within three years of death and (ii) between April 1, 2014 and January 1, 2019 will be added to the value of the decedent’s estate and may result in an estate tax on such gifts.

Repeal of New York’s Generation-Skipping Transfer Tax.
The New York (but not federal) generation-skipping transfer tax has been repealed, meaning that New York will not impose a generation-skipping transfer tax on certain trusts that are held solely for the benefit of individuals two or more generations below the creator of the trust.

Tax laws are highly technical. Always consult with your attorney or tax professional before engaging in any planning.

For more information on estate planning, read our related post – Ten Most Common Estate Planning Mistakes.

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