As our Probate, Administration and White Plains Last Will and Testament attorneys Bronx will explain, although the federal government provides an exemption for federal estate taxes for estates valued at up to $5.43 million, New York sets the state exemption much lower. After April 1, 2015, estates valued at more than $3,125,000 will be subject to New York’s estate tax. The state’s estate tax ranges from 5 percent up to 16 percent.
How the Exemption Amount Will Change
Between now and 2019, New York’s exemption amount will increase until it matches the federal government’s. Every April 1, it will increase by $1.0625 million. When 2019 arrives, the New York’s exemption will raise to to match the federal government’s. After that, it will increase in tandem with the federal exemption.
The State’s Estate Tax Cliff
When a person dies leaving an estate worth more than the federal exemption, the estate is only taxed on the amount that exceeds it. New York is different. In New York, an estate exceeding New York’s exemption is taxed on the entire value of the estate.
Surviving Spouses and Property
When you leave property to your spouse, they do not have to pay any estate tax, no matter how large the estate left to them is in New York. Before 2013, the IRS treated same-sex marriages differently than they did heterosexual ones. Consequently, many surviving spouses of legally recognized same-sex marriages in the state had to pay estate taxes due to the differential treatment. In 2013, the Supreme Court of the United States issued a ruling that stated that those who were surviving spouses of same-sex marriages in states that recognized them could no longer be treated differently by the IRS. If you were a same-sex spouse of a marriage in which your partner died prior to that decision, you may want to ask your White Plains last will and testament attorney about help with seeking a refund of the amount you paid. The decision was made retroactive, so you should be entitled to a refund.
Filing Requirements for the Estate Tax Return
If you die in New York as a resident of the state, leaving behind an estate valued at more than the state’s exemption amount, the executor of your estate will be required to file an estate tax return in New York, even if your estate does not exceed the federal amount. Even if you are a nonresident of New York when you pass away, but you own real estate holdings within the state, your executor may still be required to file an estate tax return in New York. If your executor will need to file a return, here is all of the types of property they will be required to include on it:
- All CDs and any monies in various bank accounts
- All vehicles
- All real estate holdings
- Your personal belongings
- Any life insurance that was not transferred to someone else’s ownership, for example, to an irrevocable trust
- Investment accounts
- Retirement accounts
- Your share in any business
Even if you have placed these assets in a living trust to pass them to intended beneficiaries, the IRS will still require them to be included, regardless of the fact that you avoided probate.
If your executor must file a state return, they will also have to file a federal return, even if your estate doesn’t exceed the federal exemption. Any payments owed and the return will be due nine months following your death, although it is possible to obtain an extension. As such returns are often very complicated, your executor may need to hire a White Plains last will and testament attorney for help in preparing and filing.
Contact White Plains Last Will and Testament Lawyers Bronx, NYC and Westchester
Whether you are a person who needs to figure out how to avoid the estate tax in New York or are an executor of an estate that exceeds the exemption amount, you will do well to seek the help of an experienced attorney. To meet with the Last will and testament Lawyers at Rogers & Rogers, Esq., call us today at (718) 994-1640.