New York Probate Lawyer Blog
Estate taxes are an important aspect of estate planning and estate administration. A New York estate planning attorney typically recognizes that minimizing estate tax is important so that the maximum amount of assets can be passed on to beneficiaries for their benefit. The manner in which an individual provides for tax protection will be reflected in the monetary impact estate taxes will have in estate settlement.
At present the Federal government provides an exemption of up to $5,250,000 before estate taxes are incurred. As noted in prior posts in the New York Probate Lawyer Blog all transfers between spouses are exempt from estate and gift taxes. The value of a decedent’s gross estate for tax purposes is determined by adding all of the assets that he had an interest in at the time of death such as real estate, bank funds, retirement funds, stocks and bonds, business interests, etc.
However, under present law in New York the exemption from New York estate taxes is only $1,000,000. The difference in the exemption amounts between the Federal law ($5,250,000) and New York State law ($1,000,000) created difficulty for estate planning since an estate may be able to be exempt under federal law but incur New York State tax. This problem with a high federal exemption and low state exemption is not confined to New York. In a recent post in Forbes.com by Ashlea Ebeling dated November 1, 2013 entitled “Where Not To Die In 2014: The Changing Wealth Tax Landscape”, the problem of low exemption states is discussed. As pointed out in the post, in 2014 the Federal exemption will increase to $5,340,000.00. Thus, an estate of this size will pay no federal estate tax. However, since New York only has a $1,000,000.00 exemption, an estate of $5,340,000.00 would result in a New York estate tax of $431,600.00.
Recently, a commission appointed by New York Governor Cuomo called the New York State Tax Relief Commission, issued a report in which it recommended that New York State increase its estate tax exemption to the same amount as is allowed under federal law (i.e. $5,250,000.00). According to the report, by raising the exemption amount nearly 90% of all New York estates would be exempt from estate tax. This proposal is expected to be considered for passage in the coming year.
Both Federal and New York State estate taxes are important to consider since they can have a large impact on the amount of estate assets that actually pass to estate beneficiaries. I have worked with many clients in planning their estates and in estate settlement where considering the impact of estate taxes was important and the preparation and filing of estate tax returns was necessary.
New York City Trusts and Estates Lawyer Jules Martin Haas, Esq. has been representing clients in Probate and Estate Administration proceedings throughout the past 30 years. He is available to help residents in many areas, including Nassau, Suffolk and Westchester Counties. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation or e-mail me at jules.haas@verizon.net.
Jules Martin Haas provides his clients and members of the community with a free monthly e-newsletter which contains articles covering a variety of legal topics including estate planning, financial matters and real estate. If you wish to be placed on the e-newslist, simply e-mail me at jules.haas@verizon.net. You can cancel receiving the newsletter at anytime.