New York Inheritance Tax

Your estate plan should consider the impact of New York inheritance tax

Unless you plan for it, inheritance tax (also known as estate tax or death tax) can take a big bite out of the money and property you wanted your family to inherit.

Usually, the executor of an estate is responsible for filing a New York estate tax return and paying the tax within nine months after the person dies. The executor typically works with legal and financial professionals to determine the value of the estate and to determine the federal and state taxes the estate owes. The amount of New York inheritance tax that must be paid depends on the following factors:

  • The value of the estate. Besides property and financial assets included in the federal tax return are taxable gifts that were not included in the federal tax estimate. This includes gifts that were made up to three years before the person died. Gifted property located outside New York and some other special cases are excluded from this tax.
  • The amount the estate exceeds the BEA. The basic exclusion amount (BEA) is a specified threshold amount that is excluded from New York inheritance taxes. This amount ranges from $2,062,500 to $5,740,000 depending on when the person died. For example, the BEA is $5,740,000 for someone who died from January 1, 2019 through December 31, 2019.

The tax rates
on inherited assets that exceed the basic exclusion amount range from:

  • 3.06 percent for assets valued up to $500,000, to
  • $1,082,800 plus 16.0% for assets valued at more than $10 million.

Smart estate planning can reduce or avoid inheritance tax and leave more money for your heirs.

Reducing the impact of inheritance taxes

An experienced New York estate planning attorney can help you reduce or avoid inheritance tax on your estate. Some options that can help mitigate the impact of inheritance taxes include:

  • Trust instead of a will. A trust is a written agreement that lets you manage your assets while you are living and designates someone else to control those assets after you die. You can use a trust instead of a will to pass on property. If you use a trust, your estate will not need to go through the expensive, time-consuming probate process.
  • Lifetime gift to a child or grandchild.While you are alive and after you die, you can set up a lifetime gift that would give each recipient $15,000 each year without paying a gift tax.
  • Uniform transfer to a minor. A uniform transfer gifts money to a custodian to hold for a minor until the recipient reaches a certain age. In most cases, this is set up so minors will have no access to the gift until they are 18.

Talk to your
attorney about these and other estate planning strategies that fit your
situation.

Our knowledgeable estate planning attorneys can help you reduce or avoid New York inheritance tax

The estate planning attorneys at Lissner & Lissner LLP provide skilled legal counsel to ensure that your will and estate plan protect you, your assets and your family. Located in midtown Manhattan, we have been helping our clients with their estate plans for more than 65 years. If you have questions about estate planning, call us on (212) 307-1499 or contact us online today.

Micheal Lissner
About the Author: Michael Lissner
Micheal D. Lissner is an experienced trust and estate planning and administration attorney serving the New York City area. He handles cases ranging from estate planning to trust administration, medicaid planning, elder law, and representation of survivors of the Holocaust and their heirs