Wednesday, June 11, 2014

New York State Estate Tax Has Changed

Effective April 1, 2014, exemption from New York State estate tax will be revised gradually upward over the next few years until the exemption is equal to the federal estate tax exemption. Prior to April 1, 2014, exemption from New York State tax was applicable only for estates equal or less than $1,000,000.00. This was the rule since 1997.

For decedents dying on April 1, 2014 through March 31, 2015, the excluded amount from New York State estate tax will be $2,062,5000.00.
For decedents dying on April 1, 2015 through March 31, 2016, the excluded amount from New York State estate tax will be $3,125,000.00.
For decedents dying on April 1, 2016 through March 31, 2017, the excluded amount from New York State estate tax will be $4,187,500.00.
For decedents dying on April 1, 2017 through December 31, 2018, the excluded amount from New York State estate tax will be $5,250,000.00.
For decedents dying on January 1, 2018 and thereafter, the excluded amount will be equal to the federal estate tax exemption.

For estates that are between 100% and 105% of the above exclusion amount, exemption of estate taxation will be phased out based upon a formula. Estates that exceed 105% of the above exclusion amount will not benefit from any estate taxation exemption. The entire estate will be subject to taxation.

The new law effective April 1, 2014 also repeals the New York State generation-skipping transfer tax.

Three-Year Look Back on Gifts
For gifts made between April 1, 2014 through December 31, 2018, such gifts will be clawed back and deemed part of the estate for the purpose of calculation of estate taxes if the donor dies within three years of making the gift at issue. The three-year look back rule does not apply if (1) the gift was made when the decedent was not New York State resident, (2) the gift was made before April 1, 2014, or (3) the gift was made on or after January 1, 2019.

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