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New York Estate Tax Update

Posted on Sun Feb 15, 2015, on Estate Planning

Dying in New York is about to become significantly cheaper. New legislation has been enacted to increase the New York estate tax exemption over the next 5 years. Although most people never think about State estate taxes, for most estates they outweigh any potential Federal tax owed.

Currently, the Federal estate tax exemption is $5.43 million dollars per individual. After that each additional dollar is subject to a 40% tax rate.

Compare that to New York’s current exemption of only $2 million. The current estate tax rate is 16% for every dollar over $2 million. This is why experienced estate attorneys plan with the Federal and State taxes in mind.

Upcoming Estate Tax Changes

New York is increasing its estate tax exemption to keep existing families from fleeing for low or no estate tax jurisdictions like Florida. As stated above, New York’s current estate tax exemption is about $2 million, at a maximum rate of 16%. Over the next 5 years this amount will steadily increase to match the Federal exemption by 2019. Here is a breakdown of the exact numbers:

  • Today – 3/31/2015 – $2,062,500 Exemption
  • 4/2015 – 3/31/2016 – Exemption increases to $3,125,000
  • 4/2016 – 3/31/2017 – Exemption increases to $4,187,500
  • 4/2017 – 12/2018 – Exemption increases to $5,250,000
  • 1/2019 – Match Federal exemption, projected at $5.9 million

As you can see, dying in New York is about to become a lot more attractive. A person dying in 2019 versus 2014 will be able to pass on significant additional amounts to their loved ones. It is crucial to understand tax rates when estate planning. Keeping an eye on changes in state tax laws is a sure fire way to maximize the gifts you leave behind.

Let’s take a look at an example of the effect of the estate tax currently versus 2019. For this example, assume our Manhattan family has a $4 million dollar Co-Op in Manhattan and a $1.4 million dollar residence in Miami-Dade County. These are their only assets, for simplicity’s sake.

2014 Total Asset Worth = $5.4 Million

  • Federal Estate tax liability = $0
  • New York Estate Tax Liability = $320,000
  • Florida Estate Tax Liability = $0

2019 Total Asset Worth = $5.4 Million

  • Federal Estate tax liability = $0
  • New York Estate Tax Liability = $0
  • Florida Estate Tax Liability = $0

The Manhattan resident pays more than a quarter of a million dollars more in estate tax today than in 2019! This is the clear reason why so many wealthy have fled in their golden years for Florida and why New York wants to stem the flow southward.

If you need assistance with probate or with developing your Estate Plan, please call one of our Probate Lawyers or Estate Planning Attorneys for a free consultation. We have Estate Planning Attorneys in New Jersey, Pennsylvania, New York, Minnesota and Florida.

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