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One of the major changes of the 2014 New York tax law was the gradual increase of the New York state estate tax exclusion from

One of the major changes of the 2014 New York tax law was the gradual increase of the New York state estate tax exclusion from $1,000,000 to the federal level, anchored, however, to the exemptions provided under then-existing federal tax law.

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One of the major changes of the 2014 New York tax law was the gradual increase of the New York state estate tax exclusion from $1,000,000 to the federal level, anchored, however, to the exemptions provided under then-existing federal tax law.

As of January 1, 2019, the New York estate tax exclusion amount increased from $5,250,000 to $5,740,000.

This Stroock Special Bulletin discusses how New Yorkers may plan their estates in light of this new development.

the three-year “clawback” provisions of NYTL 954(a)(3).

There is a “catch” to the federal legislation, as it “sunsets” the doubling of the federal estate, gift and GST tax exemptions on January 1, 2026, reverting to their pre-2018 exemption levels, as indexed for inflation.

For New Yorkers, the New York estate tax exemption has risen to $5,740,000 per person.

On April 12, 2019, Governor Andrew Cuomo signed into law the New York Fiscal Year 2020 Budget (the “Budget Bill”).

Included within the Budget Bill is an amendment to retroactively extend the three-year “clawback” provisions of Section 954(a)(3) of the New York Tax Law (the “NYTL”) to certain taxable gifts made by New York residents within three years of death up through the new expiration date of December 31, 2025 (the “three-year clawback”).

,000,000 to the federal level, anchored, however, to the exemptions provided under then-existing federal tax law.

These amounts are indexed for inflation and have risen to ,400,000 per person (,800,000 for a married couple) for 2019.

A dramatic consequence to New Yorkers of the doubling of the federal estate tax exemption under the 2017 Tax Reform Act and the 2019 inflation adjustment is that there is now a ,660,000 spread between the federal and New York state estate tax exemptions.

Furthermore, the benefits of an increase in the New York exclusion amount are effectively denied to wealthier New Yorkers.

The New York estate tax exclusion amount is indexed for inflation with 2010 as the base year for this purpose.

In addition, as previously noted, the law that added certain gifts made by a New York resident within three years of death to the estate for estate tax purposes has been extended through the end of 2025.

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