It is important to understand the New York Inheritance tax laws so you can make appropriate plans to protect your assets. One of the most important things to understand is how New York taxes an inheritance. New York does not charge a traditional inheritance tax like some states do, which is paid by heirs. Instead, New York charges an estate tax. This means taxation is determined based on the value of the estate, not based on those who inherit.
Understanding New York inheritance tax law is important, and you need to make certain that you have accurate information for tax planning. Mark S. Eghrari & Associates PLLC can provide you with help in determining if your estate will be taxed and in exploring ways to reduce or eliminate taxes. We can also help you to dispel some of the common myths and misconceptions about New York inheritance tax so you will be fully informed of how tax laws will work with respect to your estate.
Myths about New York Inheritance Tax
Understanding myths about New York inheritance tax is very important, because lots of people do not understand how estate and inheritance taxes work. Some of the myths and misconceptions to be aware of include:
- Myth: A living trust will help you avoid inheritance tax: Living trusts do not help you to avoid inheritance taxes. While the assets in a living trust can be transferred by trust administration instead of probate, the assets held in the trust are still taxable.
- Myth: Assets that transfer outside probate aren’t taxable: This is also a common misconception. Just because something does not pass through the probate process does not mean it will not count as a part of the value of your estate.
- Myth: You can combine your exemption with your spouse in NY: On the federal level, the first spouse to pass away can transfer his estate tax exemption to the surviving spouse if he does not use it. For example, when a husband leaves all assets to his wife, he has not taken any of his $5.45 million federal estate tax exemption, since transfers to spouses aren’t taxable. His exemption transfers to his wife, who can now pass on $10.9 million tax free. New York will not allow an exemption to be transferrable like this. Even if a husband leaves all his money to his wife tax free, or vice versa, the last surviving spouse still has only his own exemption before estate taxes will kick in.
Mark S. Eghrari & Associates PLLC can help you to ensure that you have an accurate understanding of inheritance laws so you can make the right choices in making your estate plan.
Understanding the New York Inheritance Tax
The New York State Department of Taxation and Finance provides you with comprehensive information on the rules for estate taxes in New York State. Those who are concerned about whether they will have to pay New York inheritance tax or not can refer to this website to find out what the basic exclusion amount is during the year when the death occurs. The amount that is exempt goes up each year until December 31, 2018, so the total amount due in inheritance tax can change dramatically depending upon when someone passes away.
Knowing what the exempt amount is becomes very important when making an estate plan, as you need to understand whether your assets have sufficient value to subject your estate to taxes or not. This is even more important because of the estate tax cliff in NY, which refers to the fact that NY’s taxes are structured so that as soon as your estate exceeds the basic exclusion amount, you are taxed back to the first dollar.
Mark S. Eghrari & Associates PLLC can provide you with assistance in evaluating whether your estate will be subject to taxation and can help you in the process of trying to reduce your tax liability.
Getting Help from A New York Inheritance Tax Planning Lawyer
Mark S. Eghrari & Associates PLLC can provide you with help in understanding all of the NY and federal laws that apply to your estate or to an inheritance that you receive. We know the rules and the realities of inheritance tax and we can help you to make smart and informed choices about reducing tax liability to protect assets.
To find out more about tax planning as part of your estate planning process, you can download our estate planning checklist. You can give us a call at (631) 265-0599 or contact us online to speak with a member of our legal team for personalized one-on-one advice specific to your own unique situation.