Both the federal government and New York State impose a tax on high net worth estates.
Under current law, the federal government imposes a tax on an unmarried individual’s estate if the value of the estate exceeds $5,450,000, called the “applicable exemption amount.” The federal government has a rule known as “portability,” which is a special rule applying to the estates of married couples. The rule of portability provides that if the first to die of a married couple does not fully use his or her applicable exemption amount of $5,450,000, the surviving spouse may use the unused portion of the predeceased spouse’s applicable exemption amount, in addition to the surviving spouse’s applicable exemption amount, up to a total of $10,900,000. The federal tax rate imposed on estates is a flat tax of 40% on any amount exceeding the above noted exemption limits.
New York State imposes a tax on individual estates worth more than $3,125,000. The tax rate is graduated, starting at 5% and rising to a maximum of 16%. New York State has no provision which provides for portability, as does the federal government.
There are a number of techniques available to reduce the impact of estate taxation. Contact our office today to discuss you individual situation.