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jgordosea
jgordosea, Enrolled Agent
Category: Tax
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Experience:  I've prepared all types of taxes since 1987.
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i am trying to navigate my way thru the new York state estate

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i am trying to navigate my way thru the new York state estate tax laws . very complicated ! if i am reading correctly , there is no nys "gift "tax . however any gift offsets the federal exemption . so for instance :
if a person has a taxable estate of 13mil and dies in new york . upon his death he would owe the government 40 percent of 13mil - the(NNN) NNN-NNNNexemption = 7750mil . and then he would owe new york state estate tax of (according to the 706 form) 1,082,000 plus 16% over 10,040,000 minus the 1mil exemption so the difference of 12mil - 10,040,000=x 16% = 313,600 . so the total nys estate tax bill is $1,395,600..
however if i am reading the law correctly ? which is my question .
due to the fact that there is no new york state gift tax if the same person with the 13mil estate, gifts 5mil before he dies , he essentially uses up his federal and exemption , so now his estate is taxable at 8mil for federal and state purposes with no exemption . now he owes the government 40% of 8mil because he used up his exemption as a gift (essentially a wash ?) BUT due to the NO nys gift tax law he has lowered his taxable bracket in new york state to 8mil
according toi the chart on the 706 form now he would owe new york state
$650,800 + 13.6% over $7,040,000 = $138.240 total new york state estate tax $789,400 thus saving $606,560 .. i know the state estate tax is deductible from the the total taxable estate for federal as well .
did i interpret the law correctly regarding gifting in new York state in regards XXXXX XXXXX on the state estate tax ???
Submitted: 10 months ago.
Category: Tax
Expert:  jgordosea replied 10 months ago.

Greetings,

 

Your analysis is correct:

you can give away money during your lifetime without incurring New York estate tax at your death.

See more at: http://burnerlaw.com/lawyer/2013/03/20/Elder-Law/New-York-State-Estate-Tax_bl7235.htm#sthash.al4Y2v9Y.dpuf

 

From http://www.pierrolaw.com/articles/TaxENews_March2011.pdf

"The current (and possibly temporary) federal gift tax exemption of $5 million creates a great planning opportunity for New York estate tax purposes for those taxpayers with the inclination to make large lifetime gifts to their heirs, including "deathbed gifts" made immediately prior to death.

Example:

To illustrate the point, a New Yorker with a taxable estate of $6,000,000 would pay a New York estate tax of $510,800, whereas a New Yorker who makes lifetime gifts of $5,000,000 and dies with a taxable estate of $1,000,000 would pay a New York estate tax of only $33,200, a savings of $477,600."

Of course, you must be willing to give up control when you gift. Any interest of the decedent in the property would still be included in the estate. A trust is often preferable to an outright gift to the individual if use of the funds is a potential issue.

Please ask if you need more discussion or clarification.

Thank you.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3029
Experience: I've prepared all types of taxes since 1987.
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