As of April 1, 2014 New York State has doubled its estate tax exemption from $1,000,000 to $2,062,500. The exemption is set to rise gradually through 2019 according to an article published on Forbes.com, “The New New York Estate Tax Beware a 164% Marginal Rate.” By 2019 the exemption is expected to be at least $5,250,000.00 and will be linked to the federal amount at that time.
The entire breakdown for the exemption schedule for 2014-2019 is listed in the Forbes article: http://www.forbes.com/sites/ashleaebeling/2014/04/01/the-new-new-york-estate-tax-beware-a-164-marginal-rate/.
However, while New York has taken a necessary step, the changes are not perfect. The article also speaks about the problems surrounding this change. For example, as of April 1, 2014 the exemption amount is $2,062,500 however, if a person dies with 5% more than this amount they will be taxed on the full value of their estate rather than just being taxed on the amount exceeding the exemption. Another problem cited is the lack of portability provision that exist in the federal counterpart and a three-year look back period for taxable gifts made while living in New York State between April 1, 2014 and January 1, 2019. There are many questions and complications associated with the tax exemption increase and we will know more as it is rolled out. If you have questions about how this change will affect you, contact us at (631) 424-2800 or online at www.elderlaw.pro.