During the course of preparing a New York estate plan, many different issues must be considered. Initially, the basic plan must identify beneficiaries and the property or amounts each is to receive. A thorough review and understanding of the creator’s assets and the ownership interests are essential. As extensively discussed in the New York Probate Lawyer Blog, a Will only controls assets that are held in the decedent’s name alone. Joint assets and assets with designated beneficiaries pass to the named parties automatically upon death.
Still another concern is whether to create a Living Trust as a primary vehicle for post-death transfers or to rely primarily upon a Last Will.
Regardless of the type of estate plan created, some consideration should be given to any possible effect of estate taxes. In recent years, estate taxes have received less of a review because the exemption amounts have generally increased. For the year 2020, the Federal estate tax exemption protects assets up to $11.58 Million. A husband and wife combined can protect double this amount. Also, all assets passing between a husband and wife are fully deductible and are not subject to estate tax.
While the Federal estate tax may not be a concern for most, the tax imposed by the various States may have a financial impact. In a recent article entitled, “Where Not to Die in 2020,” written by Ashlea Ebeling on January 10, 2020 and published in Forbes.com, the author reviews the many variations of taxation on the state level. While Florida has no State estate tax, New York imposes a tax after an exclusion amount of $5.85 Million. The article notes that Rhode Island excludes only $1,579,922.00 from tax and the exclusion in Illinois is just $4 Million.
It is important to know that New York’s estate tax can be very onerous. In the event the taxable estate is more than 5% over the exclusion, then the entire amount of the estate is subject to be taxed. For purposes of the estate tax, the gross estate includes the value of all assets passing through an estate administration such as probate, as well as all assets passing outside of administration such as joint assets and pay-on-death accounts. Thus, the taxable estate may exceed the exclusions. In these situations making certain as to the potential value of an estate, and possibly providing for lifetime gifts to limit the estate value, should be a consideration. There may be other planning options as well.
As can be seen, the estate tax may impact the value of an estate passing to beneficiaries. While Federal and State exclusions seem relatively high, each situation should be evaluated for possible problems and planning needs. Call Me Now for a free confidential review of your estate plan or probate issue. We provide reasonable and flexible fee arrangements and personal representation.
New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.