The budget bill proposed by Governor Cuomo includes changes in the taxation of the estates of New York residents. Although New York does not impose a gift tax, the bill provides, notably, that in calculating the estate tax on the estate of a New York domiciliary, any taxable gifts (as defined for federal tax purposes) made on or after April 1, 2014 will be included in the decedent's estate as though the gifted property were an estate asset.
While the bill has not yet been enacted into law, this may be an appropriate time for clients with large estates who have not exhausted their federal unified credit to consider making gifts prior to March 31. If the bill is enacted, the effect of such a gift would be to avoid New York estate taxation on the gifted property, producing an effective savings of approximately 10% of the gift, valued as of the date of the decedent's death.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.