New York estate taxes are among the highest in the United States. Fewer than half of the states in the US still impose estate taxes on their residents, as New York does. After working hard your entire life and carefully saving and investing your assets, the last thing you want is to give more money to New York State than you have to via estate taxes. If you would like to save money on your estate taxes, it’s worth taking the time to consult with an experienced estate tax planning lawyer.
Working with an experienced estate tax planning lawyer can help you decrease your estate tax liability. The New York estate tax planning lawyers are here to help. We will carefully review your estate plan and financial situation to engage in estate tax planning. Contact us today to schedule your initial consultation to learn how to decrease your estate tax liability.
New York’s Estate Tax Laws
After you pass away, your estate must pay an income tax and an estate tax. An estate tax consists of a lump sum payment after you pass away. The amount an estate must pay for estate tax is based on your estate’s value at the time of your death. The executor of your estate is responsible for paying the estate tax.
New York residents who are US citizens must abide by New York’s estate tax laws. Additionally, residents of other states who are US citizens and own tangible property or real estate in New York must abide by New York’s estate tax laws. Individuals who own real estate or tangible property in New York but are not US citizens need to file an estate tax return when their estate is required to file a federal tax return.
Estate Tax Exemptions
When an estate is valued at over $5,930,000 at the time of the testator’s death, the executor must file an estate tax return. When estates are valued at less than $5,930,000, it is exempt from paying estate tax under New York law. New York draws a hard line when determining which estates must pay estate tax. The hard-line amount is modified each year and increases at the same rate as the consumer price index.
Even if the estate exceeds the exempt amount by only 1 percent, New York law requires the entire estate to be taxed, not just the 1 percent that exceeds the exempted amount. Using legal strategies to decrease your estate’s value can result in a savings of hundreds of thousands, or even millions of dollars in estate taxes.
Suppose a testator has an estate valued at $6,000,000, only $70,000 over the exemption limit. In that case, the testator would owe $171,840 in estate taxes. His or her heirs would inherit $101,840 less from a $6,000,0000 estate than from an estate valued at $5,930,000. Ensuring that the estate’s value falls within the exemption limit can save your beneficiaries a significant amount of money. At CDH Law PLLC, we will review your estate plan and develop strategies to decrease your estate value to avoid paying estate taxes through an exemption.
Estate Tax Planning
Many New York residents are understandably concerned about the estate taxes their assets and property may be subject to after their death. Thinking about a large amount of your hard-earned assets and property going to the state instead of your chosen beneficiaries can be discouraging. However, there are many different strategies an estate planning lawyer can use to help you decrease your liability. Using the following estate planning tools, the legal team at CDH Law PLLC can help you lessen the impact of New York’s estate tax.
Include a “Santa Clause” Provision
This strategy involves making a conditional bequest to your favorite charity. You will include a “Santa Clause” provision in your will or revocable trust that donates the number of assets above New York State’s exemption amount to a non-profit of your choice. This donation only takes effect when the number of assets over New York’s exemption amount will be taxed at over 100%. Using a “Santa Clause” provision, you can ensure that your estate is exempt from New York’s estate tax limit.
Lifetime Gifts and Asset Transfers
High net worth individuals should also consider making lifetime gifts to the friends, family members, or charities of their choice. Individuals can give up to 11.7 million dollars before they owe a federal gift tax. New York State doesn’t impose a gift tax, but it does apply a “clawback rule.” Any gift someone makes within three years of his or her death is clawed back or added to the value of his or her estate to determine estate taxes in New York. We can help you devise a gifting strategy that will lower your estate’s value to avoid paying estate tax.
Ownership Structure and Equity Planning
In other cases, you can engage in ownership structure and entity planning to lower your estate value. For example, you may be able to transfer ownership of a primary or vacation home into the name of a legal business, such as an LLC or partnership. Using an entity can make it easier for you to get a portion of the real estate to your heirs or transfer the property into a trust. If you are a resident of New York State and you own property in the state, you may be able to use entity planning to exempt your property from estate taxation.
Contact a Syracuse Estate Tax Planning Lawyer Today
Consulting with an estate planning lawyer will help you navigate New York’s complicated estate tax regulations. The estate tax lawyers at CDH Law PLLC have helped many New York clients protect their assets from New York state tax. Contact us today to begin the process of creating an estate tax planning strategy to protect your hard-earned assets.