Understand Estate Taxes When Developing Your Estate Plan in Westchester County
New York has some of the strictest estate taxes in the country and taxes estates below the federal exemption. However, in 2014, new estate tax laws were enacted that would gradually raise the amount of the exemption so that, by 2019, the exemption amount for New York would be the same as the Federal Level. However, there are complications with the new laws, meaning that some may end up having to pay more on their estate than they would have under the old law. Because of the complexity of the new estate tax laws, when you are developing your estate plan, you should hire a Westchester estate attorney with an understanding of the changing laws to help you.
In 2014, exemption was raised from $1,000,000. This meant that for those who died between April 1, 2014 and March 31, 2015, the exemption amount would be $2,062,500. For those who die between April 1, 2015 and March 31, 2016, the exemption amount would be $3,125,000. What this means is, if the total amount of your estate is under these amounts, estate taxes would not have to be paid.
However, there are a few things that make the new estate laws problematic. For starters, when it comes to determining the amount of the estate, there is now a three-year look back on taxable gifts, meaning the amount of these gifts would be added into the amount of the estate.
Most problematic is how this new law will tax those who are subject to the estate tax. Under the old law, the amount taxed would be the total amount that was over the estate tax exemption of $1,000,000. This would mean that, for example, someone had an estate worth $1,050,000, the estate taxes owed would only be on the $50,000 over the exemption rate. Under the new law, however, if someone died on April 1, 2015, and their estate was worth $3,175,000, they would owe taxes on the entire $3,175,000, not the $50,000 they are over.
This creates a huge tax leap when it comes to how much property taxes are owed and could drastically lower the worth of the estate when it comes to paying off other creditors and bequeathing gifts to loved ones. It also means that, if you have an estate which is valued close to the exemption amount, that an experienced Westchester estate attorney should be brought in to assist you in your estate plan. Depending on the amount of your estate, there could be as much as a 16% New York estate tax alone, meaning that a plan should be put in place to make sure that your loved ones, and not the state, inherits your estate. Call the Law Offices of Albert Gurevich today at (914) 293-2043.