In 2014 New York passed a budget that finally addressed an estate
tax that was driving people out of state.
The new legislation gradually increases the amount that escapes death
taxes. Here is the breakdown:
Before April 1, 2014 $1,000,000
April 1, 2014 – March 31, 2015 $2,062,500
April 1, 2015 – March 31, 2016 $3,125,000
April 1, 2016 – March 31, 2017 $4,187,500
April 1, 2017 – December 31, 2018 $5,250,000
January 1, 2019 and beyond Matches
the Federal exemption
As of April 1st, 2015, if your estate is less
than $3,125,000 it will not owe taxes to New York. The Federal estate tax exemption is currently
$5,430,000 per person.
You may think this means there is no need for estate
planning anymore, but you couldn’t be more wrong. Good old New York will tax your entire estate
if it’s 105% or more of the exemption amount.
This means if you are anywhere near the limit you had better do some
planning! The limit isn’t as difficult
to get to as it seems when you factor in all the assets in your name plus the
value of any life insurance you own on yourself.
I recently saw an example of how proper planning could have
made a huge difference. A client’s
husband died with over $2 million in assets and left it all to his wife, which
means no estate taxes were owed due to the spousal exemption. Unfortunately,
now the wife has almost $4 million in her name alone, meaning if she passes
away today the entire $4 million will be taxed by New York. This would result
in hundreds
of thousands of dollars of avoidable estate taxes!
Learn more at www.sbvfinancial.com
