Both the federal government and New York State impose estate taxes. An estate tax is a tax on the right to transfer assets. Like with many other types of taxes, estate tax rules constantly change. Also, like with many other types of taxes, the rules are incredibly complex. In addition, the federal government imposes a gift tax.
Under current law, the federal government imposes an tax on individual estates of more than $5,120,000, called the “applicable exemption amount.” The federal government has a rule known as “portability.” This rule provides that if the first to die of a married couple does not fully use his or her exemptions amount, the surviving spouse may use the unused portion of that exemption amount in addition to his or her exemption amount. There is a flat tax rate of 35% on amounts over those exemption limits.
New York State imposes a tax on individual estates over $1,000,000. The rate is graduated, rising to a maximum of 16%. New York State has no provision of portability as does the federal government.
There are a number of techniques available to reduce the impact of estate taxation. Call to discuss you individual situation.