New York is one of twelve states, along with the District of Columbia, that tax the estates of decedents who resided or owned property located within its borders. Aside from these concerns, many other factors will affect how the state will handle your children’s inheritance, beginning with whether or not you have a valid will. For more information on how you can ensure that your children receive your estate in New York, please continue reading, then contact an experienced Rockland County will attorney today. Some questions you may have include:
Does New York have an inheritance or estate tax that could prevent your children from receiving your estate?
For better or worse, New York does not charge an inheritance tax. However, it does include an estate tax in its laws. The Empire State has set a $6.11 million estate tax exemption. This means that if the decedent’s estate exceeds that amount in fair market value, the state requires the estate to file a New York estate tax return within nine months of the deceased’s death. Of course, survivors may have grounds for extensions.
Does the federal estate tax jeopardize my children’s inheritance?
It could, but only if your estate exceeds $12.06 million in fair market value. In some cases, you might have to pay state estate taxes but not federal estate taxes. Both the federal and New York governments require the estate to file a final individual state and a final individual federal income tax return by tax day of the year following the individual’s death.
What assets are subject to estate taxes in New York?
New York law divides property into two straightforward categories: personal property and real property. The latter includes items like houses and land or, more broadly, real estate. Conversely, the former includes just about everything else, such as:
- Family heirlooms
The federal and New York governments lump all of that into a person’s estate. Furthermore, since New York is not a community property state, a decedent’s spouse will not automatically receive most or all of his or her property following his or her death. As alluded to above, the federal and New York governments will calculate your potential tax exposure based on the fair market value of the assets, rather than the amount that the decedent originally paid for them.
What steps can you take to ensure your children inherit your property in New York?
First and foremost, you should create a valid will. Second, you may want to look into creating some trusts to facilitate the transfer of your assets upon your death. For example, you might start with an intentionally defective grantor trust, a type of irrevocable trust that allows a trustor to isolate certain trust assets so as to separate income tax from estate tax treatment on those assets. Your survivors can also use life insurance proceeds to pay for any estate taxes, especially if you transfer ownership of the policy, thereby circumventing the likelihood that the state and federal governments will include it in calculations of fair market value.
To bring any of these options to fruition, speak with a skilled Rockland County wills, trusts and estates attorney immediately.
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