Updates to the tax laws of New York are available here and are effective as of April 1, 2014!
New changes in tax
laws that affect a person’s estate that you should be aware of:
- Changes on estate tax exclusions rising substantially (to eventually match federal estate tax exclusion). See NY Tax Law section 952(c);
- Reforms on gifts given prior to death. See NY Tax Law section 954(a); and
- Repeal of the New York Generation Skipping Transfer tax. See Part X, Section 8, repealing article 26-b).
On March 31, 2014, Governor
Cuomo signed legislation that makes broad changes to the New York State Estate
and Gift Tax Laws, as well as some technical changes to certain trust income tax
rules.
Pursuant to New
York Tax Law §952(c), estate tax exclusions will be rising dramatically each
year from the current New York State amount of One Million Dollars
($1,000,000.00) to Five Million Two Hundred Fifty Thousand Dollars
($5,250,000.00) by 2017, which is the current federal estate tax exemption
amount. Estate tax exclusion means the dollar amount a person’s estate can pass
free from New York Estate Tax. More specifically, for individuals dying on or
after April 1, 2014, and before April 1, 2015, the estate tax exclusion amount
will be Two Million Sixty Two Thousand Five Hundred Dollars ($2,062,500.00).
For individuals dying on or after April 1, 2015, and before April 1, 2016, the
estate tax exclusion amount will be Three Million One Hundred Twenty Five
Thousand Dollars ($3,125,000.00). For individuals dying on or after April 1,
2016, and before April 1, 2017, the estate tax exclusion amount will be Four
Million One Hundred Eighty Seven Thousand Five Hundred Dollars ($$4,187,500.00).
Lastly, for persons dying on or after April 1, 2017, and before January 1,
2019, the estate tax exclusion amount will be Five Million Two Hundred Fifty
Thousand Dollars ($5,250,000.00).
Pursuant to New
York Tax Law §954(a), gifts made by a New York resident within three (3) years
of that person’s death on or after April 1, 2014, and before January 1, 2019, will
be added back into that person’s estate. Bringing these gifts back into the
deceased person’s estate will now increase that person’s gross estate and this may
make those gifts subject to the New York Estate Tax now, depending on the size
of the estate, as discussed in the previous paragraph.
Pursuant to Part X,
Section 8 of the new tax laws, the New York State Generation Skipping Transfer
Tax is repealed. Prior to its repeal, this tax imposed a generation-skipping
transfer tax on outright gifts to persons who are two (2) or more generations
below the transferor, or on distributions from certain trusts that are held
solely for the benefit of said persons.
These are only a
few changes to the current New York State laws that are affecting estate
planning in the future. To summarize, these new laws will narrow and ultimately
eliminate the estate tax exclusion gap between the New York and Federal estate
tax exclusion amounts. For the next five years, however, as the tax estate
exclusion amount increases and the taxable gift laws apply, estate planning
will become more complex.
See all the recent changes in the New York State laws, effective April 1, 2014, on page 488.