A New York Probate Attorney’s View
New York State, like other states such as Pennsylvania and New Jersey, has an Estate Tax that is payable by the estates of New York residents or by those owning real property in New York. The estate tax is a transfer tax, meaning a tax on the fair market value off assets transferred from one person to another. In this case, it is the transfer of assets at one person’s death to another person, the beneficiary.
What is Taxed: The tax includes all assets in the gross estate, which means all the property that the deceased owned, had control over or had an interest in at death. Some states exclude certain assets from taxation, such as Pennsylvania’s exclusion of life insurance. New York does not.
Filing Requirements: To determine if an estate is required to file a return, the executor must perform some calculations. All estates of New York residents whose total federal gross estate plus the federal adjusted table gifts exceed $1,000,000 must file the return. Similarly, a U.S. resident or citizen at death who is not a New York resident but whose estates includes real or tangible personal property located in New York must also file the return. For estates close to $1,000,000 this means the executor must be careful to verify that they have discovered all past gift tax returns the deceased may have filed.
New York Estate Tax Returns: If a return is required, each estate must file a Form ET-706 (New York State Estate Tax Return). In addition, the nonresident estates must file Form ET-141 (New York State Estate Tax Domicile Affidavit).
Attachments: The New York Department of Finance will also want you to provide copies of the death certificate, the decedent’s will and/or relevant trusts, copies of appraisals, letters of executor’s appointment, and copies of relevant documents regarding the estate’s litigation.
Revocable Trusts: Revocable or “Living Trusts” are useful tools in New York to avoid probate costs, but they have no effect on the amount of New York Estate Tax due.
Tax Rates: Transfers to surviving spouses either outright or in certain trusts are not taxed. The calculation for other transfers is calculated by using a graduated rate schedule found in Form ET-706. Generally, the tax will range between 5.085% to 16%.
Closing Letter: The executor’s goal is to obtain a Closing Letter, which the New York State Tax Department provides to certify that no tax is due or to serve as a final receipt for the amount due and paid. The executor should keep this as part of the permanent estate record. Currently, it takes four to six months to obtain the Closing Letter once the return is correctly filed.
Throughout our website, klenklaw.com, you will find more information about Estate Planning, Probate and Estate Planning tools. Our firm focuses exclusively in the area of estate planning, probate, and the litigation surrounding estate planning and probate including Will Contests and Will Challenges. If you have estate planning questions, please call one of our Experienced Estate Planning Lawyers for a free consultation. Estate Planning is all our Will drafting lawyers do!¹
¹ The Law Offices of Peter Klenk has Will drafting attorneys licensed in New York, Pennsylvania, New Jersey, Florida and Minnesota.