New York Adopts Major Changes to Estate and Trust Taxation

On April 1, 2014, New York State enacted a new budget (the “Budget Legislation”), which includes legislation that makes significant changes to New York tax law. Included in the Budget Legislation are reforms that will more closely align New York’s estate tax exclusion with the federal exclusion, include some lifetime gifts in the taxable estates of New York decedents and subject the income of certain trusts to New York tax for the first time. New York taxpayers should be aware of how these changes may affect them.

Estate Tax Changes Aligning New York and Federal Estate Tax Law Prior to the enactment of the Budget Legislation, New York’s estate tax laws conformed to the federal tax code as it existed in 1998 and provided for a fixed $1 million exclusion amount from New York estate tax. Given the significant changes to federal tax law over the last 16 years, this meant that much of New York estate tax law was tied to federal laws that no longer exist. Perhaps the most significant disparity was that the federal unified estate and gift tax exclusion amount, which is indexed for inflation, rose to $5.34 million in 2014 while New York’s exclusion amount was set to remain at $1 million. The Budget Legislation implements several reforms, discussed below, that apply to the estates of decedents dying on or after April 1, 2014.

Please see full memo below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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