As part of his 2014-2015 budget, Governor Cuomo has proposed significant changes to the New York estate and gift tax law. First, over four years, from April 2014 through December 2019, the New York estate tax exemption will increase from $1,000,000 to $5,250,000. After December 2019, the estate tax exemption will be indexed for inflation. Planning will still be important, because a surviving spouse will not be able to use a decedent’s unused New York exemption. This is the opposite of the federal rule, which does allow a surviving spouse to use a decedent’s unused federal estate tax exemption. Also, the New York exemption will always be less than the federal exemption. The top rate of estate tax will be reduced from 16% to 10%.
Second, the New York estate tax will be calculated using not only the value of assets in the decedent’s estate at the time of death, but also add back taxable gifts made after April 1, 2014. New York residents who have not used up their federal lifetime gift tax exclusion of
$5,340,000 should consider making taxable gifts before April 1, 2014. New York residents with large estates may find it advantageous to make gifts in excess of the federal lifetime gift tax exemption.
Please contact me if you have any questions.
Mr. Hendel has been practicing wealth preservation planning for over thirty years.