Maroney Law Blog

Tuesday, August 19, 2014

Changes in the New York Estate Tax Exemption Amount and New Gift Tax Legislation

The New York estate tax exemption refers to the amount an individual may gift to others free of New York estate tax. Previously, this amount, in New York, was capped at $1,000,000 per individual. However, legislation passed earlier this year has increased the amount to $2,062,500 for individuals dying on or after April 1, 2014. Furthermore, this amount is scheduled to increase annually over the next five years at which point it will be equal to the federal estate tax, which is currently $5,340,000 per individual and indexed for inflation, for estates of individuals dying on or after January 1, 2019.

Essentially, the New York estate tax exemption is “phased out” for taxable estates valued above the exemption amount, and no exemption is available for taxable estates valued above 105 percent of the exemption amount. This means that the new increased exemption amount will effectively decrease estate tax burden for individuals whose taxable estate falls below the 105 percent mark. Individuals who will have a taxable estate valued above that threshold will not receive the benefit of the new exemption amount.  However, some speculate that because of the way the estate tax is calculated these individuals are likely to pay the same amount of New York estate tax as under the prior law.

In addition to the aforementioned changes, the new legislation also provides that gifts (other than to a spouse or a charity) in excess of the annual exclusion amount ($14,000 per donor per recipient per year), are now subject to a New York State estate tax, if the gifts were made within the three years prior to death. However, this rule applies to only to gifts made between April 1, 2014, and January 1, 2019, by an individual who was a resident of New York at the time of the gift. In addition, annual exclusion gifts and qualified gifts, such as those for medical or educational purposes, would not be affected by this new rule.

Careful planning and the implementation of a sound strategy can often times help alleviate unexpected estate tax burdens. If you have questions about estate planning, tax exemptions, or how the recent changes in the law will affect you or a loved one, contact the experienced estate attorneys at Maroney & Associates, PLLC. 

Based in Melville and Garden City, New York, the attorneys at the Law Offices of Maroney Associates, PLLC assist clients throughout Nassau County, Suffolk County, Queens, and the cities of Mineola, Hempstead, New Hyde Park, Franklin Square, Williston Park, Queens Village, Melville, Huntington, Farmingdale, Patchogue and Uniondale, NY.

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