February 7, 2019
By: Ryan T. Emery
As of January 1, 2019, the New York State estate tax exclusion amount is increased to $5,740,000 per person. This is an increase from the prior exclusion amount of $5,250,000.
The Federal equivalent amount is now $11,400,000 per person. The annual gift tax exclusion amount remains at $15,000 per gift recipient.
As stated in my post regarding the 2017 Tax Cuts and Jobs Act (https://mackenziehughe.wpengine.com/blog/estate-and-gift-law-changes-under-the-2017-tax-cuts-and-jobs-act) the Federal exclusion amount is portable between spouses while the New York State exclusion amount is not.
In addition, New York State estate tax computation contains a “cliff”: if the estate is more than 105% over the New York exclusion amount, the value of the exclusion amount is lost, and the entire estate is subject to estate tax (at a top rate of 16%).
If you think your taxable estate may be close to the New York exclusion amount you may wish to consider including a “santa clause” provision to your Will (or Trust as applicable). In general terms this provision is one that directs your fiduciary to make a gift to charity (a deduction in the estate tax computation) to reduce your taxable estate to the exclusion amount and more assets then remain for distribution to your beneficiaries.
If your estate will be in excess of the New York exclusion amount you may wish to preserve the exclusion with the utilization of a credit shelter trust.
Your estate planning documents should be reviewed every few years and when you have personal or family changes and as tax legislation changes.