New York Updates: New York Clings To Estate Tax 'Cliff' And Lower Estate Tax Exemptions

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Day Pitney LLP
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Day Pitney LLP is a full-service law firm with more than 300 attorneys in Boston, Connecticut, Florida, New Jersey, New York and Washington, DC. The firm offers clients strong corporate and litigation practices, with experience on behalf of large national and international corporations as well as emerging and middle-market companies. With one of the largest individual clients practices on the East Coast, the firm also has extensive experience assisting individuals and their families, fiduciaries and tax-exempt entities plan for the future.
To prevent New Yorkers from making deathbed gifts to avoid the cliff, New York reinstated a three-year clawback on taxable gifts made within three years of death.
United States Family and Matrimonial
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The federal estate tax exemption is currently much larger than the New York State exemption ($11.4 million versus $5.74 million in 2019). While neighboring states have repealed their estate tax or increased exemption amounts, New York remains committed to its current exemption and its estate tax "cliff," under which estates exceeding the exemption amount by as little as 5% lose the entire benefit of the exemption and are taxed on the full value of the estate, not just on the amount over the New York exemption. Under this regime, a New York taxable estate of $5.74 million would not be subject to estate tax, but a slightly larger estate of $6 million would owe $495,800 in New York estate tax.

To prevent New Yorkers from making deathbed gifts to avoid the cliff, New York reinstated a three-year clawback on taxable gifts made within three years of death. The clawback applies to gifts made between April 1, 2014, and January 1, 2026 (with a limited exception for gifts made between January 1 and January 15, 2019). Gifts made during this period, if occurring within three years of death, will be added back to the decedent's taxable estate for purposes of calculating New York estate tax.

If you believe you may be impacted by the cliff or the three-year clawback, please contact your Day Pitney estate planning attorney to discuss planning opportunities that may be available to you.

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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.

New York Updates: New York Clings To Estate Tax 'Cliff' And Lower Estate Tax Exemptions

United States Family and Matrimonial
Contributor
Day Pitney LLP logo
Day Pitney LLP is a full-service law firm with more than 300 attorneys in Boston, Connecticut, Florida, New Jersey, New York and Washington, DC. The firm offers clients strong corporate and litigation practices, with experience on behalf of large national and international corporations as well as emerging and middle-market companies. With one of the largest individual clients practices on the East Coast, the firm also has extensive experience assisting individuals and their families, fiduciaries and tax-exempt entities plan for the future.
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