Until recently, New York residents who died with estates exceeding $1,000,000 in value were subject to the State estate tax. (Note: This is separate from the Federal estate tax exclusion, which is $5.34M for 2014.)
That all changed on March 31, 2014, when the NY State legislature passed a new budget. The new estate tax law, effective April 1, 2014, increases New York’s basic tax exclusion up to the federal level over the next five years. This means that estates will be subject to less tax, which means more goes to heirs or beneficiaries.
Here is what the New York State estate tax exclusion will be in the coming years:
- 4/2014-3/2015: $2,062,500
- 4/2015-3/2016: $3,125,000
- 4/2016-3/2017: $4,187,500
- 4/2017-12/2018: $5,250,000
Starting in January, 2019, the New York State exclusion will be identical to the current federal estate tax exclusion.
This is excellent news! While not so many New Yorkers have estates exceeding $5 million, obviously many more have estates exceeding $1 million, especially if they have owned a home in New York City for an extended period of time. I also believe many New York senior citizen residents consider post-retirement moves to more tax-friendly states, like Florida, to avoid things like the previous New York State estate tax.
There is one thing to look out for, however. There will now be a three-year look-back for estate tax purposes for any gifts made after April 1, 2014 which were larger than the annual gift exclusion amount. (The annual gift exclusion for 2014 is $14,000.) Under the previous State law, such gifts were not included in the donor’s estate.
Have you considered the effect of taxes on your estate?
Free Email Updates
Enjoy special offers and invitations to events.