On March 31, 2014, Governor Andrew Cuomo signed legislation which made significant changes to the NY estate and gift tax laws. While on the whole these changes will provide significant relief to NY taxpayers, they also come with some interesting changes that may lead taxpayers to take another look at current estate plans.
What’s New?
First and foremost, the law brings good news to NY taxpayers. The law significantly increases the NY estate tax exclusion amount immediately, while continuing to incrementally increase the exclusion amount over the next five years. For estates arising after April 1, 2014, the exclusion amount is increased from $1,000,000 to $2,062,500. In April 2015, the exclusion amount increases to $3,125,000 and then increases again each year until eventually matching the federal exclusion amount in January 2019. The federal exclusion amount is indexed with inflation and could be somewhere between 5M and 6M in 2019.
While the increases in exclusion amounts are good news, they also come with a small catch. The benefit of the NY exclusion amount will be phased out for taxable estates between 100 and 105 percent of the exclusion amount.
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