Proposed Legislation Would End NY Estate Tax Savings OpportunityFebruary 18, 2014
As soon as April 1, 2014, New York residents might lose the opportunity to reduce (or even eliminate) their New York estate tax through lifetime gifts!
With the federal estate and gift tax exemption at $5,340,000 for 2014 and increasing in future years as it is indexed with inflation, gifting has been a common method used by New York residents to reduce their future New York estate tax. However, Governor Cuomo has proposed legislation that would prevent that reduction method from being effective. Although the proposed legislation does gradually increase the New York estate tax exemption from $1,000,000 to $5,250,000 over five years and lowers the top tax rate (from 16% to 10%), it would also require that all taxable gifts made after March 31, 2014, shall be included as part of a taxpayer’s gross estate for purposes of calculating the New York estate tax.
Consequently, New York residents making lifetime gifts before April 1, 2014, can benefit from potentially substantial tax savings. Such gifts could be made directly to persons or could be to a trust for the benefit of certain persons. However, no matter the method of the gift, April 1, 2014, is arriving quickly and time is of the essence to make gifts to reduce New York estate tax.
Related Practices: Tax and Trusts & Estates