As part of his 2014 budget plan, Governor Cuomo has proposed making major changes to the estate tax law in New York State.Â New York presently imposes an estate tax on estates of more than $1,000,000 with a maximum estate tax rate of 16%.Â In contrast, the federal government exempts the first $5,340,000 of an individual's estate from estate tax.Â The result of this disparity between state and federal law is that many individuals are required to set up more complex estate plans than they would otherwise need just to avoid or minimize the impact of the New York estate tax.
Governor Cuomo has proposed increasing New York's estate tax exemption from $1,000,000 to $5,250,000 and lowering the top estate tax rate from 16% to 10% over the next four years so that by 2019 the New York estate tax exemption would equal the federal estate tax exemption.Â From an estate planning and wealth preservation perspective, this would be a welcome change for New Yorkers.
While Governor Cuomo's proposal has yet to pass, similar bills have already been proposed in the State Senate and Assembly, evidencing that there is support for increasing the estate tax exemption in New York.Â All going well, the budget is expected to pass by March 31, 2014; and while the details are still to be determined, the consensus is that New York will be increasing the estate tax exemption amount.
What do these potential changes mean for you?
If you are married, have more than $1,000,000 in combined assets, and have an estate plan which contains trusts intended to avoid or minimize the imposition of an estate tax (commonly referred to as "credit shelter" or "exemption" trusts), you and your spouse may now be able to simplify your estate plan.
Please call our office to review your estate plan in light of these pending changes.