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Planning the New York Estate – Here We Go Again

shutterstock_1123004039-300x199Estate planning in New York has always been important.  The New York Probate Lawyer Blog has published numerous articles over the years discussing the need for, and issues involved with, a Last Will, Living Will, Health Care Proxy, Power of Attorney and Living Trust.

However, as estate planning lawyers are aware, concerns about estate taxes have largely taken a back seat.  This is because during recent years, the exemption levels for incurring estate tax liability have been quite high.  Thus, most estates do not need to worry about New York State and Federal estate tax.  During 2021 the Federal estate and gift tax exclusion is $11.7 Million per individual.  As a result, a married couple could pass $23.4 Million without fear of any tax.  On the State level, New York provides an exemption of $5,930,000.00 per individual.  Also, there is no New York gift tax.  When these amounts are coupled with an unlimited deduction for transfers between spouses, there are relatively few estates where estate tax issues may be encountered.

With the advent of the new administration in Washington, D.C., there is renewed consideration by some lawmakers of overall tax increases.  This includes reducing the Federal exemption limits and raising taxable estate rates.  While the specifics of what new laws will be enacted are unknown, the imposition of increased taxes typically results in new models for planning to diminish the effect of potential tax increases.  The use of marital deduction trusts, insurance trusts, transfers of interests in small businesses and other gift structures all may gain renewed popularity.

One significant aspect of the recent possible tax changes involves the limitation or elimination of the concept known as stepped-up basis.  Presently, a decedent’s assets receive a tax basis valued at the decedent’s date of death, thus stepping up the value from the original purchase price of the asset to present market value.  The basis step up allows beneficiaries to liquidate estate assets without paying tax on any value gained over the years prior to death.  For example, a house purchased by a decedent for, say, $10,000.00, which is worth $100,000.00 at the time of death can be sold post-death for $100,000.00 without incurring any tax on the $90,000.00 gain.  The reduction or elimination of a step-up would have significant tax consequences for a person inheriting such property.

Planning an estate is still important for the basic function of creating a plan that expresses a testator’s intentions and insures that beneficiaries receive estate shares in an organized and efficient manner.  Such planning preempts the application of intestacy laws and avoids Surrogate’s Court cases such as Will contests.  A testator can create testamentary trusts and choose executors and trustees.  However, an eye now needs to be kept on the developments in the tax laws which may have additional impact for years to come.

I have represented clients in all types of Surrogate’s cases and estate planning matters.  Call Me Now for a free confidential review of your estate or probate issue.  We offer 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.

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