As you begin to plan your estate, it’s important to keep in mind the tax implications that come along with it. In New York State, there are specific laws and regulations that dictate how estate taxes are calculated and how they can impact your assets. In this blog post, we’ll take a closer look at the tax implications of estate planning in New York State, so you can make informed decisions about your estate.
What is Estate Planning?
Estate planning is the process of preparing for the transfer of your assets after your death. This typically involves creating a will, establishing trusts, and making sure your beneficiaries are properly designated. The goal of estate planning is to ensure that your assets are distributed according to your wishes, and to minimize any taxes or fees that may be incurred.
New York State Estate Tax
New York State has its own estate tax, which is separate from the federal estate tax. As of 2023, the New York State estate tax exemption is $6.58 million, which means that estates valued at less than this amount are not subject to the state estate tax. For estates valued above this amount, the tax rate starts at 3.06% and increases up to 16%.
In addition to the estate tax, there is also a New York State gift tax. This tax is imposed on gifts made by New York residents, regardless of where the gift recipient lives. The gift tax applies to gifts over a certain amount, which varies depending on the year.
Federal Estate Tax
In addition to the New York State estate tax, there is also a federal estate tax that applies to estates valued above a certain threshold. As of 2023, the federal estate tax exemption is $12.92 million. This means that estates valued at less than $12.92 million are not subject to the federal estate tax. For estates valued above this amount, the tax rate starts at 18% and increases up to 40%.
How to Minimize Estate Taxes
There are several strategies that can be used to minimize estate taxes in New York State. One common strategy is to establish a trust. By placing assets in a trust, they are removed from the estate and are not subject to estate taxes. Another strategy is to make gifts during your lifetime. By making gifts while you are still alive, you can reduce the size of your estate and minimize estate taxes.
Working with an estate planning attorney can help you navigate the complex tax laws in New York State and develop a comprehensive estate plan that meets your needs. By taking the time to plan your estate properly, you can ensure that your assets are distributed according to your wishes and minimize any taxes or fees that may be incurred.
Estate planning in New York State involves careful consideration of the tax implications that come with it. Understanding the state and federal estate tax laws, and working with an experienced attorney, can help you develop a strategy to minimize taxes and protect your assets for future generations.
It’s important to note that estate planning is not a one-time event. As your assets and family situation change over time, your estate plan should be reviewed and updated to reflect these changes. Failure to update your estate plan can result in unintended consequences and may not achieve your goals.
In addition to tax implications, estate planning in New York State also involves considerations related to probate, Medicaid planning, and asset protection. Working with an experienced estate planning attorney can help you navigate these complex issues and ensure that your estate plan meets your unique needs and goals.
Overall, the tax implications of estate planning in New York State can be complex and require careful consideration. However, with proper planning and the guidance of an experienced attorney, you can develop a strategy that minimizes taxes and protects your assets for future generations. Whether you are just starting the estate planning process or need to update your existing plan, taking action now can provide peace of mind and protect your legacy for years to come.
Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. is a law firm that specializes in estate planning and administration. The firm has been serving clients in Buffalo and throughout Western New York for over 50 years.
The attorneys at Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. have extensive experience in all aspects of estate planning, including wills, trusts, powers of attorney, and health care proxies. We can help you develop a comprehensive estate plan that reflects your unique needs and goals, and minimize the tax implications associated with estate planning.
The firm’s attorneys can also assist with estate administration, including probate and trust administration. We can guide you through the complex legal process of settling an estate, and ensure that your loved one’s assets are distributed according to their wishes.
In addition to estate planning and administration, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. can also assist with Medicaid planning, asset protection, and business succession planning. We are committed to providing personalized legal services and developing long-term relationships with our clients.
If you are in need of estate planning services in Buffalo, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. can provide you with the guidance and expertise you need to protect your assets and provide for your loved ones. Contact us today to schedule a consultation and learn more about how we can help you achieve your estate planning goals.