New York, like several other states, has a state estate tax. The answers below are intended to guide those who remain baffled by the New York estate tax cliff. The New York cliff is not easy to understand, nor is it easy to know how it may impact your particular situation. For many clients, the subject of the New York estate tax “cliff” continues to remain a source of confusion. Osterweil at (212) 785-4861 or or any other member of the Frankfurt Kurnit Estate Planning & Administration Group.In 2014, dramatic changes were made to New York’s gift and estate tax law. If you have questions about these recent changes, or about other estate and tax planning matters, please contact Linda J. There is no separate estate tax, gift tax or GST tax in New Jersey. Transfers to a spouse, child, stepchild or grandchild of the decedent are exempt from inheritance tax. New Jersey imposes an inheritance tax, which is based on the relationship between the decedent and the beneficiary. There is no separate GST tax in Connecticut. Connecticut, like New York, does not allow for “portability” of the Connecticut estate tax exemption between spouses. However, taxable gifts made by a New York resident prior to Decemand within three years of death are taxable in such individual’s estate.īeginning in 2023, the Connecticut estate and gift tax exemption will equal the Federal exemption (as adjusted for inflation) ( i.e., $12.92 million per individual). There is no separate gift or GST tax in New York. Unlike Federal law, New York does not allow for “portability” of the New York exemption between spouses, so it is important to implement planning that will effectively utilize the New York estate tax exemptions of both spouses. As a result of this “cliff” tax, in 2023, if a taxable estate exceeds $6.909 million, the entire taxable estate will be subject to the New York estate tax. Note, however, that the benefit of the exemption is “phased out” for taxable estates between 100% and 105% of the exemption amount, and eliminated entirely for taxable estates that exceed 105% of the exemption amount. When evaluating your estate plan, it is also important to consider recent developments in state laws:Īs of January 1, 2023, the New York exemption amount is $6.58 million per individual (up from $6.11 million in 2022). Beginning in 2023, the annual gift tax exclusion is $17,000. Each year an individual may make gifts of any amount up to the annual exclusion to an unlimited number of recipients without using up any part of such individual’s Federal gift tax exemption. In 2022, the IRS issued proposed regulations that could alter this result for certain lifetime gifts over which the donor retained prohibited interests or powers.Īnnual gift tax exclusions are available in addition to the Federal gift tax exemption. IRS regulations now provide that individuals who use the increased Federal exemption amount for lifetime gifts will not be adversely affected by a decreased Federal estate tax exemption after 2025 ( i.e., no “clawback” if the exemption amount in the year of death is lower than the amount of exemption used during life). This increased exemption can be applied to lifetime gifts, and any unused exemption remaining at death will be available to the individual’s estate.Ībsent intervening legislation, the Federal exemption amount will be increased for inflation each year until January 1, 2026, when it will revert to $5 million, adjusted for inflation. The Federal estate, gift and generation-skipping transfer (“GST”) tax exemption amounts have increased in 2023 to $12.92 million per individual (up from $12.06 million in 2022).Īccordingly, as of January 1, 2023, an individual may transfer a total of $12.92 million free of Federal estate, gift and GST taxes, and married couples may transfer a total of $25.84 million. February 6th, 2023 Increased Exemption for 2023 Creates Estate Planning Opportunities
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