Personal Planning Strategies - April 2014

New York Significantly Changes its Estate Tax – No Decrease in Estate Tax for the Wealthy

The New York State legislature has passed, and New York Governor Andrew M. Cuomo has signed, the Executive Budget for 2014-2015, which significantly alters New York's estate tax. The changes to the New York estate tax were made for the ostensible purpose of preventing the exodus of wealthy individuals from New York to more tax-favored jurisdictions, but the law will likely not have the desired effect. Although the law increases the amount that may pass at death free of New York estate tax (the "New York basic exclusion amount"), it also entirely eliminates the use of the New York basic exclusion amount by wealthy individuals. This will ultimately result in heavy New York estate tax being levied on estates valued at more than the amount that may pass free of federal estate tax (currently $5.34 million per person, as indexed for inflation) (the "federal exemption amount").