New York estate taxes are separate from, and different from, federal estate taxes. It is possible you will have to pay New York estate taxes when federal estate tax payments are not required. If you or someone you love owns property or assets within the state of New York, you need to know the rules for how your estate will be taxed after your death.
Mark S. Eghrari and Associates PLLC provides comprehensive assistance with all estate tax matters. We can help you to understand when and how New York estate taxes are assessed. We also provide you with information on federal estate taxes and on possible options for reducing or avoiding your estate tax obligation. Give us a call today to find out more about the ways in which a Suffolk County estate planning lawyer can assist you with all of your estate tax issues.
What are the Rules for New York Estate Taxes?
The New York State Department of Taxation and Finance explains the rules for New York estate taxes. According to the Department, an estate tax return must be filed with state taxing authorities if the amount of the NY resident’s federal gross estate and the amount of includible gifts exceed the basic exclusion amount which applies at the date of the death.
The basic exclusion amount (BEA) is the amount of money which you can pass on to heirs after a death without triggering New York estate tax. This amount of money in New York is different than the excludable amount under federal law which applies to federal taxes. In New York:
- If the death happened on or after April 1, 2015 and occurred on or before March 31, 2015, the basic excludable amount was $2,062,500.
- If the death happened on or after April 1, 2015 and occurred on or before March 31, 2016, the basic excludable amount was $3,125,000.
- If the death happened on or after April 1, 2016 and occurs on or before March 31, 2017, the basic excludable amount is $4,187,500.
- If the death occurs on or after April 1, 2017 and prior to December 31, 2018, the basic excludable amount will be $5.25 million.
In New York, once you hit the limit for the basic excludable amount, your entire estate is taxed. This is sometimes called the “estate tax cliff” because going just a small amount over this excludable amount can suddenly result in a large tax bill being assessed after a death has occurred.
New York estate taxes, when they are required, have to be paid by the estate within nine months of the time when the deceased person passed away. The estate has to file Form ET-706, and this form must be completed even if the estate is not required to file a federal estate tax return.
What are the Rules for Federal Estate Taxes?
Federal estate taxes differ in important ways from New York estate taxes. One of the biggest differences is the excludable amount is much higher. No federal estate taxes must be paid unless the estate is valued at more than $5.45 million as of 2016, $5.49 million as of 2017.
Starting in January of 2011, the IRS also began allowing spouses to pass on their unused estate tax exemption to a surviving spouse. In other words, a husband could leave his entire estate to his wife (or vice versa) and wouldn’t owe any taxes because gifts to a spouse are tax free. The wife could use her $5.49 million exemption and her husband’s exemption to pass on $10.9 million in assets without federal estate taxes being assessed. Obviously, such a large estate would be subject to New York estate taxes.
How Can an Estate Planning Lawyer Help With New York Estate Taxes?
Avoiding or reducing estate taxes is often one of the primary goals of individuals who are involved in estate planning. Mark S. Eghrari and Associates PLLC can review your financial situation, help you to determine how much will be owed in taxes when your estate transfers, and offer you advice on ways to try to reduce your taxable estate. We also assist you in using available legal tools to try to protect your legacy by limiting the amount of estate taxes due.
To learn more about how estate taxes work and when they are charged, download our estate planning checklist. You can also give us a call at (631) 265-0599 or contact us online to find out more about all of the estate planning services that we can offer to help you protect the inheritance you wish to leave to your loved ones.