Estate Planning Strategies in New York: Estate and Inheritance Tax

Navigating the intricacies of your financial legacy can be daunting. Understanding the nuances of estate and inheritance tax is the first step in choosing estate planning strategies that help minimize tax impacts on your legacy. This article explains estate and inheritance tax and how estate planning strategies in New York can help reduce taxes.

What Is New York Estate Tax?

Estate tax in New York is taxes paid on a deceased person's assets. Also called the "death tax," both a state and federal estate tax are levied on the right to transfer a decedent's property. An estate's value determines if it's subject to estate tax. According to Smart Asset's article, "New York Estate Tax," New York's estate value threshold in 2024 is $6.94 million. The estate's executor or administrator pays estate taxes to the government before heirs receive distributions.

What is Inheritance Tax? Does New York Have an Inheritance Tax?

Assets distributed to an heir or beneficiary are taxed and paid by the recipients. No, New York does not have an inheritance tax. Talk with an experienced estate planning attorney at Parker Law Firm if you have questions about distributing or receiving an inheritance in a different state.

Read more: Will My Social Security Benefits Be Taxed?

What Estate Planning Strategies in New York Can Reduce Taxes?

Making charitable contributions is an effective strategy for minimizing estate taxes. Donations to qualifying charitable organizations can reduce your taxable estate while allowing you to contribute to causes you care about. This estate planning tool requires proper documentation and adherence to tax laws to ensure your estate benefits from the tax reductions applicable to charitable contributions.

Though less flexible, irrevocable trusts can transfer assets to the trust and decrease an estate's taxable value. They are also difficult to cancel or change. Consult with Estate planning attorney David Parker in White Plains to discuss different types of trusts. Read our article, “Estate Planning in New York is for Any Stage of Life Starting at 18,” to learn more.

How Does The Tax Cuts And Jobs Act Affect Estate Tax Planning in White Plains?

The Tax Cuts And Jobs Act significantly impacted estate tax planning by increasing federal tax exemption. This change means fewer estates will be subject to the estate tax. However, it is essential to remember that many parts of the Jobs Act are temporary.

As New York individuals or families create or update an estate plan, it's crucial to consider future changes, such as lower exemption limits. By taking a proactive approach and engaging in careful planning and continual review of your estate strategy, you can adapt to legislative shifts and protect your estate from excessive taxation, ensuring you remain in control of your financial future.

Read more: Estate Planning - Why Do Families Fail when Transferring Wealth?

Estate Planning Strategies in New York Key Takeaways:

• Estate Tax: Understand the implications of New York estate tax on your legacy.
• Inheritance Tax: Consult an experienced estate planning attorney in New York if you are distributing assets to an heir in a different state.
• Estate Plan: Keep updated with New York tax law changes that might impact your estate plan.

Conclusion

Estate planning in New York can be daunting and complex, highlighting the need to understand estate tax and strategies to reduce taxes for your estate and beneficiaries. Book a call with the Parker Law Firm to discuss tax strategies as part of your comprehensive estate plan.

References:

Smart Asset (Jan 3, 2024) "New York Estate Tax," 

Cornell Law School “Tax Cuts and Jobs Act of 2017 (TCJA)”