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WHAT IS THE NEW YORK STATE ESTATE TAX? NEW YORK’S 2014 OVERHAUL OF THE ESTATE TAX

23
Apr

By Jason Stern

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Historically, when someone passed away in the State of New York their estate was subjected to the NY Estate Tax or “death tax” as it is referred at both the State and Federal levels. Until recently a NY estate lawyer had to contend with astronomical NY estate tax liability easily encompassing upwards of 60% of any and all probatable estate assets. In fact, as recently as 2008 any and all estate assets within NYS over $1 million were subjected to the progressive NYS estate tax of between 6%-16%. To make matters worse, any and all estate assets exceeding $2 million were subjected to the additional Federal Estate Tax of 40%. Therefore, a NY estate lawyer trying to minimize their NY estate client’s tax liability had their work cut out for them. However since 2008 the Federal Estate Tax has been steadily increased and is now only imposed on assets within individual estates exceeding $5,340,000.00, or $10,680,000.00 for married couples. As a NY estate lawyer I can tell you for all but the very wealthy, this eradicated the need for NY estate planning for most New Yorkers at the Federal level. But what about the NY State estate tax?

While a NY estate lawyer no longer needed to contend with the estate tax at the federal level on any and all estates of $10.5 million for married couples, there was a very real threat of estate tax liability at the NY State level. As such NY estate lawyers still needed to recommend estatestrategies for any and all NY estate clients with estate assets exceeding $1 million. That was untilApril 1, 2014.

On January 1, 2014, 12 states plus the District of Columbia still had a State Estate Tax. Of those 12 states plus the District of Columbia that continue to impose a State Estate Tax on probatable assets, New York was among the most onerous. As a NY estate lawyer I am happy to say that as of April 1, 2014, that is no longer the case. Pursuant to New York State’s newly enacted executive budget NYS now has one of the best State Estate Taxes in nation, as you can see below.

The State of New York did three things to the New York State Estate Tax on April 1, 2014. First they raised the minimum threshold of New York State Estate assets that are taxable from $1,000,000.00 per individual to $2,062,500.00. Thus your NY estate lawyer can help a married couple within the State of New York pass $4,125,000.00 of wealth without any NY State Estate Tax liability. This is good news for both NY estate lawyers and their clients.

Secondly, The New York State Budget provided for incremental annual increases to the exemption amounts of NYS estate tax as indicated below;

New York State Estate Tax Exemption

——————-Individuals ————-Married Couples

March 2014 $1,000,000.00 ————-$2,000,000.00

April, 2014 $2,062,500.00 —————$4,125,000.00

April 2015 $3,125,000.00 —————-$6,230,000.00

April 2016 $4,187,500.00 —————-$8,375,000.00

April 2017 $5,250,000.00 —————-$10,500,000.00

Thirdly, there is a caveat to all this good news. The New York State Legislature did employ a 16% estate tax on any and all estate assets in excess of 5% of the NY estate tax exemption amounts as indicated above. Thus, the prior NY estate law that provided for a gradual scale tax of between 6%-16% has been replaced with what is now known as the NY estate tax cliff of 16%.

Any NY estate lawyer will tell you this is a major improvement. Before this NY Estate tax overhaul, the NYS estate tax was becoming a tremendous burden on the middle class. The wealthy have always gone to great lengths with the help of NY estate lawyers to set up elaborate estate plans and complicated trusts circumventing the estate tax all together. However, this left the middle class exposed. Under the recent changes included within the NYS Executive Budget, New York will be now be protecting the middle class from the onerous death tax going forward.

If you or a loved one are thinking about planning your estate and would like to speak with a New York estate lawyer or NY wills lawyer, feel free to call The Law Offices of Jason W. Stern & Associates at (718) 261-2444 for a free consultation. Our Queens estate lawyers have nearly 45 years of combined NY estate law experience drafting and probating the wills for families like yours in the counties of Queens, New York, Kings, Bronx, Westchester, Rockland, Nassau, Orange, Dutchess as well as in the State of New Jersey.