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New York Raises Estate Tax Exemption to $2.06M Immediately and $5.25M by 2017

Posted on: May 1st, 2014
new york estate taxEffective April 1, 2014, the New York State estate tax exemption is $2,062,500. This is more than a 150% increase from the previous $1 million. The maximum tax rate remains at 16% until March 31, 2015. (The minimum is 3.06%.) Future budget decisions will determine the new rate. The exemption will increase annually until it reaches $5.25 million in 2017, and it’s forecasted to rise again to $5.9 million in 2019.

A critical part of the law to consider when preparing and revising estate plans is the “cliff.” If a decedent in New York has an estate 5% larger than the exemption amount, then the entire estate is taxed.

Gifts made after March 31, 2014 will be included in the taxable estate if they were made within 3 years of the decedent’s death.
Included with the approved changes is a throw-back tax on accumulation distributions to NYS resident beneficiaries from a NY resident, non-grantor trust that currently qualifies for the “NYS resident trust exception,” and treatment of incomplete gift, non-grantor trusts (INGs) as grantor trusts for NYS income tax purposes.

The new law has the benefit of many more New Yorkers plan their estates without the worry of estate taxes. However, for those with larger estate, careful estate planning is even more important now. How individuals choose to hold and transfer their assets could maximize wealth for future generations, or translate into a tax win for the State of New York. Schedule a review of your estate plan with a lawyer soon. 
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