An estate that is worth more than $1 million is a bit more common in New York than in other states, but for much of recent history, those residents were hit with a 16 percent state tax on their estates. This led to many New Yorkers moving out of state to more tax-friendly locations to ensure that heirs were able to keep as many estate assets as possible. Recognizing the drain of these estates to other locations, legislators have implemented a gradual plan making golden years in New York much more attractive.
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Every year until 2019 the exemption will increase based on what day the individual in question passes away. Since small nuances in the law and a minor mistake could lead to bigger tax consequences, those with estates above $1 million should conduct an annual review of their tax planning to verify asset maximization. Even being off by one cent can throw off an entire plan, so it’s vital that regular review and analysis are used to help protect the estate. The new exemption is increased by $1,062,500 every year until reaching the federal exemption amount in 2019. At present, some New Yorkers have looked to DING and NING trusts, those trusts held in other states to reduce tax consequences.
This move, combined with estate tax changes that exempt small businesses from massive taxes after an owners death and decreases in the state’s corporate tax rate, were applauded by the tax policy research organization Tax Foundation. The organization noted that it these were important steps towards improving the reputation of ease of doing business within the state. All of the recent changes were adopted in the most recent state budget, details of which were released at the end of March. Special planning for New York tax liability can be completed by an estate planning specialist. For tax planning strategies, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.