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Major Revisions to New York’s Estate Tax System
Date: April 9th, 2014    Written by Stephen B. Hand

The New York Executive Budget for 2014-2015, which was recently signed into law, has made substantial changes to New York’s estate tax system.  Except as noted below, these changes became effective on April 1, 2014.

The “exclusion amount” (which is the amount of an estate that is shielded from New York estate tax) for New York residents dying on or after April 1, 2014, which was previously $1,000,000, has been increased as follows:

For individuals dying on or after…

And before…

Exclusion Amount

April 1, 2014

April 1, 2015


April 1, 2015

April 1, 2016


April 1, 2016

April 1, 2017


April 1, 2017

January 1, 2019


Commencing January 1, 2019, the State exclusion amount will follow the federal exclusion amount, which is currently $5,340,000.00, but is indexed for inflation. However, a New York resident with an estate that exceeds 105 percent of the exclusion amount will receive no protection from the New York estate tax and will be subject to New York estate tax on the entire value of his or her estate. While the increase in the exclusion amount will benefit many New Yorkers, the law does unfavorably change the manner in which New York will calculate the amount of a decedent’s estate. Under the prior law, the estate tax only applied to assets owned as of the date of a person’s death. However, under the new law gifts made within three years prior to death will be added to assets owned by the decedent at the time of death in determining the amount of the taxable estate. This “add back” does not apply to gifts that were made prior to April 1, 2014, that are made after January 1, 2019, or that are made while the decedent was not a resident of New York.

The new law also addresses certain types of trusts that are structured from an income tax perspective to “reside” in a jurisdiction other than New York State, thus avoiding New York income tax on their accumulated income. Under the new law, beneficiaries of such trusts who are New York residents will be required to include distributions of accumulated income from those trusts for purposes of their personal New York State income tax. This change is effective June 1, 2014.

For more information about these changes and how they may impact you, please contact one of the attorneys in out Trusts and Estates Practice Group. You may reach us at (516) 746-8000.

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Stephanie A. Speirs is sworn in at the Appellate Division, Second Judicial Dept.

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