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Tax Implications of New York Estates

In New York State, the estate tax is graduated, ranging from 5 percent to 16 percent. There is currently a basic exclusion amount of $5.25 million in New York State. Estates valued at or less than that amount are not subject to estate tax. Estates that are valued at more than 5 percent of the basic exclusion amount are taxed for the full value of the estate, except for money that is inherited by a spouse or is donated to charity. Those two categories are not taxable. Estates that are valued at greater than $5.25 million, but not above the 5 percent threshold, receive a very limited deduction.  Dealing with the tax implications of New York estates after the loss of a loved one can be difficult to navigate. It may be critical to contact an experienced trusts and estates attorney to guide you through the process.

Estate Tax Returns

An estate tax return details all the assets and calculation of tax, like any other tax return. All assets are included in an estate tax return, including the value of real estate and other personal property. The estate tax return is due nine months after the date of death, but a person can obtain an automatic six-month extension to file the return. However, payment of any tax due must be made within nine months of the date of death.

Usually, an executor or an administrator or personal representative will need to include the will, appraisals, the death certificate, and other miscellaneous documents with the estate tax return. An estate lawyer can help ensure no tax implications of New York estates are accidentally left out.

Estate Tax Considerations

Assets are valued as of the date of death, or in certain circumstances, six months after the date of death. In addition to filing state and federal estate tax returns, a personal representative may need to file tax returns which show the income that the estate received during its administration.

Tax mitigation is an important part of estate planning. A person wants to minimize their tax liability so they can leave as much as possible to their loved ones. An experienced and knowledgeable estate planning lawyer can help clients understand their options for reducing the tax implications from their estate.

Considerations for Planning an Estate

In addition to offering further options for minimizing tax liability, a trust can give a person more control over their assets after their passing. With a trust, a person can set requirements or restrictions on asset distributions. For example, a person can use a trust to ensure that only a certain percentage of their assets are distributed to heirs each year to ensure that money isn’t spent too quickly.

A person should review their estate plan anytime there has been a change in either estate taxes or their life situation, such as the birth of children, a death of relatives, inheritance of money, or any other event that might cause a person to want to make changes to their will. It is wise to review an estate plan periodically because laws and tax rates can change.

It is wise for a person to review their estate plan at least every five years to better assess the tax implications of New York estates. Any time their financial situation or life circumstances change may be a good time to update their will.

Effect of Relocation

Tax structures on estates vary from state to state, as do other statutes. In New York, spouses are entitled to a third of the estate automatically. Other states may not have these statutes, or they may require a larger portion of the estate to go to a spouse. When relocating to a different state, it’s always a good idea to review the laws of that state with an attorney.

A skilled estate planning attorney will keep abreast of what’s in the plan, review it periodically, and educate the plan’s owner about new developments in the law that may require the plan to be updated.

How a Lawyer Can Help with Updates

Some updates to an estate plan are very simple. Others are more complicated. An estate lawyer can make the process of updating an estate as quick and painless as possible. In addition, such an attorney will be well equipped to ensure that all the tax implications of New York estates are addressed, ensuring that no part of the estate is overlooked.