Both the federal government and New York State impose a tax on property that you pass at death. However, in both cases there has been a high exemption in recent years.
· New York State's exemption for people who die in 2022 is $6,020,000, up from $5,930,000 in 2021. Note that in NY, if the estate is worth more than 105% of the exemption amount, the entire estate is subject to tax - there is no benefit for the exemption amount.
· The federal estate tax exemption for people who die (or make gifts) in 2022 is $12,060,000, up from $11,580,000 in 2021. The tax rate is 40%, and with proper planning, few people pay estate tax.
Both the federal government and New York State impose an estate tax on assets you pass at death. Under the federal estate tax system, you can make up to $12,060,00 for 2022 in gifts during life (and at death) and not pay an estate tax. A married couple gets double that amount, and one spouse can use the unused exemption of the first spouse to die, if proper election is made on a federal estate tax return.
In New York State, there is no tax on gifts made during your life, but gifts made within three years of death are included in the calculation of assets you own when you pass away. It's essential to plan for the NYS estate tax if you're in the ballpark. Rates climb as high as 16%.
Under federal and state rules, there are some breaks:
When taxes do kick in, they are hefty. The federal estate tax rate is 40%, and New York State has graduated rates to 16%. In my experience, tax planning is especially important for single people who cannot take advantage of the "unlimited marital deduction" and for anyone who has wealth levels that would subject them to tax.
It's important to get your documents in order with any business or estate planning. Contact the law firm of Susan G. Parker Law Associates, P.C. at (914) 923-1600 to help you organize and plan.