Governor Cuomo has proposed a slew of changes to New York's estate and gift tax law that may affect you.
Under the new law, all taxable gifts made by a New York resident after March 31, 2014 must be included as part of the gross estate for purposes of calculating the New York estate tax, according to WealthManagement.com.
How does this differ from the current law?
Current NY Gift Tax Law v. Proposed NY Gift Tax Law
Currently, there is no gift tax in New York. That means under current state law, there is no specific estate tax imposed on lifetime taxable gifts made by a New Yorker.
Under the proposed change, New Yorkers who make taxable gifts after March 31, 2014 will have to pay estate taxes on those gifts. New Yorkers can expect an additional net estate tax ranging anywhere from 6.5 to 12 percent, if the New York gross estate, including taxable gifts, exceeds the New York exclusion amount.
Apart from gift taxes, the governor's proposal also gradually increases the state estate tax exemption from $1 million to $5.25 million, gradually reduces the top state estate tax rate (the exact opposite of what Warren Buffet wanted) from 16 percent to 10 percent, repeals the state generation skipping transfer tax, and closes the resident trust loophole, according to Mondaq.
Executor Responsible for Paying Tax
Under New York's tax law, the executor of a decedent's estate is liable for paying the tax. The executor must then equitably divide the estate tax -- among the people interested in the gross tax estate -- and collect it.
Governor Cuomo's proposed budget is set to be finalized April 1st and it's not an April Fool's joke. Given the technical complexity of the changes and the time crunch, it is strongly recommended that New York residents work in the interim with their tax attorneys and estate planning attorneys to determine if and how the budget proposals (if passed) may impact their estate plans and income tax strategies.
- 3 Need-to-Knows About the NY Estate Tax (FindLaw's New York Estate Planning News Blog)
- 3 Complex Estate Planning Concepts (FindLaw's New York Estate Planning News Blog)
- 5 Ways to Minimize Estate Taxes (FindLaw's New York Estate Planning News Blog)
- Financial Planner vs. Estate Planner: What's the Difference? (FindLaw's New York Estate Planning News Blog)