by Long Island Attorney Paul A. Lauto, Esq.
New York’s gift and estate tax law has changed effective April 1, 2014 and some of it is good, some of it is bad and some of it is really ugly. The law enacted differs from the proposed law, as detailed in our March 10, 2014 blog.
The good news is that the NYS estate tax exemption limit, will gradually increase over the next five years to match the federal estate tax exemption limit. The increased limits are as follows:
1. $2,062,500 from April 1, 2014 through March 31, 2015.
2. $3,125,000 from April 1, 2015 through March 31, 2016.
3. $4,187,500 from April 1, 2016 through March 31, 2017.
4. $5,250,000 from April 1, 2017 through March 31, 2018.
5. From January 1, 2019 on, it will match the federal exemption.
The bad news, is that the new law has imposed a 3 year look back period for gifts. That means that gifts made within 3 years prior to death, will be added back in to the estate for tax purposes. The exceptions are gifts made prior to April 1, 2014, gifts made while not a New York resident and gifts made on or after January 1, 2019.
Now for the ugly part of the new law. Previously, estate tax was payable on the amount that exceeded the estate tax exemption limit. Under the new law, if the taxable estate is more than 5% over the estate tax exemtion limit, the entire amount of the estate becomes taxable. In this scenario, the tax consequences far exceed that under prior law.
Accordingly, all gift giving and estate planning should be guided by the changes in the new law. Governor Cuomo and state legislators have effectively given new meaning to the adage, “They give with one hand and take with the other.” We will probably never know the true reason as to why the new law underwent last minute changes to become what it is today. However, it would appear that it is the work of politics as usual. If you have any questions, please do not hesitate to contact our office.
Long Island Lawyer
Paul A. Lauto, Esq.
www.liattorney.com
Mr. Lauto has primarily focused on personal injury throughout his career and previously worked as in-house counsel to a major insurance company. In 2002 Mr. Lauto established Paul A. Lauto, PLLC, with a primary concentration on personal injury, all types of accident cases, Wills, Trusts and Estates and more. Paul is the sole author of his Scales of Justice blog, which provides updates and information about current legal stories in the news and how they may affect our lives. Mr. Lauto prides himself on providing clients maximum results, with a high level of personal attorney service and attention that is uncommon in the profession. For more information please visit http://www.liattorney.com
