New York’s reputation for high taxes and living expenses developed for valid reasons. The New York tax environment is one of the most unfavorable jurisdictions in the country—consistently topping lists like “Worst Places to Die.”
A trend is under the lens of lawmakers that involves individuals in New York choosing a no income tax state, transferring significant assets into an out-of-state trust there, and retaining the benefit of their assets without the New York state income tax burden. In certain circumstances, capital gains tax obligations may be reduced as well.
As an estate planning tool, the use of out-of-state trusts may also help minimize New York estate tax on a decedent’s assets. According to Bloomerg, discussions have started among lawmakers creating legislation to limit or further regulate the use of out-of-state trusts by New York residents. No formal bills are available yet for review, but New York residents should get ready for possible changes.
Several states have no or limited state income tax requirements. TrustCounsel’s tax and asset protection lawyers serve two states with no income tax: Florida and Tennessee. Properly establishing and maintaining an out-of-state trust should be with the counsel of a tax attorney experienced with multi-state tax requirements’ unique challenges.
Residents in any state may benefit from an out-of-state trust. Minimizing an income tax burden is just one benefit of a trust for residents of a high tax state like New York. Confidentiality, control and asset protection are also attractive features of trusts, and they can be structured for multiple needs. Learn more about different types of trusts below, and discuss options with a trust attorney in your state: