For the safety of our clients and staff, and as required by law, all Ettinger Law Firm offices are closed until we are permitted to reopen.

Please be assured that all staff is currently working remotely and are available to you by email or phone.

All staff will be checking their phone and email messages daily*.

Please call our Director of Client Relations, Pattie Brown, at 1-800-500-2525 ext. 117 or email Pattie at pbrown@trustlaw.com if you need any further assistance.

* You can also use this link to schedule a phone consultation with one of our attorneys.

Don’t Forget: There is a New York Estate Tax on Top of Federal Tax

Much discussion at the end of last year dealt with the estate tax. As federal officials groped for a compromise to avoid the so-called “fiscal cliff,” details about the federal estate tax were one part of the negotiations. Democrats wanted it returned to levels during the Clinton Administration while Republicans wanted it eliminated altogether.

Just before the deadline, a law was passed which apparently settled some of the matters of contention. In so doing, it seemed to finally provide some permanence to the federal estate tax. The tax rate now tops off at 40% (a jump from the previous 35%) and begins on parts of the estate over $5.25 million. The exemption level is pegged to inflation, and so it will rise slightly each year.

With news of this new estate tax compromise (and its relatively high exemption level), many have pointed out that the federal tax is now only a concern to a small slice of the population. After all, the majority of residents will not die with assets over $5.25 million, and so estate planning to avoid that federal tax is unwarranted.

Yet, in all the discussion over the tax and the political battle around it, some may be under the impression that the federal estate tax is the only major tax issue with which they need to be concerned regarding their long-term planning. This is misleading. That is because, among other things, many states still have their own separate estate tax. And the state taxes usually kick in at far lower levels than the federal one.

That is certainly true in New York. Our state taxes all assets over $1 million, with a top rate of 16%. While this may still seems like a large amount, there is a mountain of difference between one and five million dollars–and a huge number of families will need to account for New York estate taxes while not worrying about federal estate taxes. When the value of retirement accounts, homes, cars, stocks, bonds, and other assets are all taken into account, it is not uncommon for an estate to pass the $1 million threshold even when community members would not expect it to do so.

The bottom line is that many New Yorkers need to be aware of this estate tax burden. Don’t be deceived about news stories touting a $5.25 million exemption level. Be sure to talk with a NY estate planning lawyer and ensure you are best positioned to pass as large a portion of your assets as possible in the manner you desire.

Contact Information