Are you familiar with New York's estate and death tax system? New York is one of 14 states with an estate tax -- a tax on the cash, real estate, stocks, bonds and other property left by residents who have died. But the law might soon change.
The taxation of wealth transfer is a complicated area of law, but a basic introduction to estate taxes and death taxes can help you start thinking about this pressing financial planning issue.
Here are three things to know about estate taxes and death taxes in New York:
- How to calculate your estate tax. An estate is required to file a New York State estate tax return if the total of the federal gross estate plus the federal adjusted taxable gifts and specific exemption exceeds $1 million. How much you pay is determined on a case-by-case basis using the graduated rate schedule.
- Difference between federal and state estate tax. The federal estate tax -- also called the death tax -- applies to estates valued at more than $5.34 million, or up to double that amount for a married couple. It is adjusted for inflation every year. New York taxes state residents' estates valued at $1,000,000, with no added break for spouses.
- Possible reform on the horizon. New York Governor Andrew Cuomo is proposing a significant reduction in the state's estate tax. Cuomo's 2014-15 budget would phase in a higher basic exemption over the next five years, ultimately matching the federal threshold, and cut the state's top death tax rate to 10% from the current 16%, the New York Daily News reports.
The law is currently in flux, so you'll definitely want to consult an estate planning attorney to keep abreast of any developments that could potentially impact you and your loved ones. With the assistance your attorney, you can sort out myriad financial planning concerns, including where it is most financially wise to retire.
- 5 Ways to Minimize Estate Taxes (FindLaw's New York Estate Planning News Blog)
- 3 Complex Estate Planning Concepts (FindLaw's New York Estate Planning News Blog)
- George Soros and Warren Buffett Want Higher Estate Tax (FindLaw's New York Estate Planning News Blog)
- Asset Diversification is Important in Financial Planning (FindLaw's New York Estate Planning News Blog)