On April 1, 2014, Governor Andrew Cuomo signed into law the first significant changes to New York’s estate tax in almost 15 years. The new rules will further reduce the number of New York estates that will be subject to a state estate tax. But for the wealthiest New Yorkers, the new legislation may lead to a more significant estate tax burden than would have been in effect under the prior rules.
For deaths occurring between:
- April 1, 2014 to March 31, 2015 -- $2,062,500
- April 1, 2015 to March 31, 2016 -- $3,125,000
- April 1, 2016 to March 31, 2017 – $4,187,500
- April 1, 2017 to December 31, 2018 -- $5,250,000
A further twist is that gifts made within three years of death, if made between April 1, 2014 and January 1, 2019, will be added back to the decedent’s taxable estate unless the decedent was not a New York resident at the time the gift was made. This rule applies even to gifts of real estate and tangible personal property located outside of New York State, even though such property would not have been subject to New York estate tax had the decedent owned the gifted property at the time of her death.
The bottom line: while the estates of a growing number of New Yorkers will be exempt from the obligation to pay New York estate tax, the wealthiest New Yorkers may have even greater incentive than before enactment of the new rules to establish residency in a state that does not impose a state estate tax.