On April 12, 2019, Governor Andrew Cuomo signed into law the New York Fiscal Year 2020 Budget (the “Budget Bill”) on April 12, 2019.  An amendment was included within the Budget Bill to retroactively extend the three-year “clawback” provisions of Section 954(a)(3) of the New York Tax Law (the “NYTL”) to certain taxable gifts made by New York residents within three years of death up through the new expiration date of December 31, 2025 (the “three-year clawback”).

New York estate.

New York has a current estate tax exemption of $5,740,000 (adjusted annually for inflation).  When a New York taxable estate exceeds the exemption, it will be lost and the entire estate will be taxed at rates up to 16%.  New York does not impose a gift tax on donations made during an individual’s lifetime, but the state has a “clawback” provision that allows taxation on gifts made within three years of a death for estate taxation purposes.  Since the clawback provisions were extended, individuals can make gifts in order to reduce New York estate valuations that will be taxed under the current estate tax exemption amount. If a client dies within three years of gifting, that amount may still be included in the total estate value.  This updated provision gives individuals who have large estates an opportunity for estate plans that include gifting to remove assets from estate taxation at the federal and state levels.

Probate and assets.

When a person with a substantial estate dies, it is important to coordinate actions with a New York Probate attorney with regard to gifting, or how provisions of clawback may impact the probate process.  In New York not all assets are legally required to go through probate, so if an estate is made up of non-probate assets, the process can be bypassed for parties interested in a timely administration of an estate.  If an estate is made up of non-probate assets, probate may not be necessary at all.  Since each case is unique and asset distribution will need to be addressed, it is best to consult with Ron Meyers, a knowledgeable probate attorney in New York.

 Hire legal counsel.

The assistance of experienced legal counsel who understand New York State and federal laws that will impact its administration, including the manner in which valuation will occur under the clawback provisions.  Contact Attorney Ron Meyers with probate questions and concerns if you are wondering if you can avoid probate, need to identify potential hurdles of probate and wonder about the timeline attached to your specific case.

 

Ron L. Meyers & Associates, PLLC

Address:  475 Park Avenue South, Suite 2100

Manhattan, NY 10016

Phone: 212-644-8787

Sources:

https://www.nysenate.gov/legislation/laws/EPT/13-1.2

https://www.nysenate.gov/legislation/laws/EPT

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