It is always an emotional and difficult time when families Lose any of their loved ones. Unfortunately, it can also be a time of confusion and stress when it comes to dealing with the deceased person’s estate taxes. In the state of New York, there are certain rules and regulations that govern estate taxes, and it’s important for families to understand what to expect in order to avoid any surprises or unexpected financial burdens. Of course, a wise person will always consult a reliable Queens estate tax planning lawyer before making any decisions that can be detrimental to their family or estate.
What Are Estate Taxes?
Estate taxes, also known as inheritance taxes, are taxes that are paid on the transfer of property and assets from the deceased person to their heirs. In the state of New York, estate taxes are determined based on the value of the estate at the time of the owner’s death.
NY Estate Tax Exemptions
The state of New York has an estate tax exemption that allows estates with a value below a certain amount to avoid paying estate taxes. As of 2023, the New York estate tax exemption is $5.93 million. If the estate is valued at less than this amount, then no estate tax is owed. However, if the estate is valued above this amount, then estate taxes will be owed on the portion of the estate that exceeds the exemption.
Federal Estate Tax vs NY Estate Tax
It’s important to note that the estate tax in New York is separate from the federal estate tax. While the federal estate tax exemption is $12.06 million in 2023, the New York estate tax exemption is much lower. This means that some estates may be exempt from the federal estate tax, but still owe estate taxes in New York.
NY Estate Tax Rates
The estate tax rate in New York is based on a graduated scale, with rates ranging from 3.06% to 16% depending on the value of the estate. For estates valued at over $10.1 million, the top tax rate of 16% applies. It’s important for families to understand these rates in order to properly plan for the potential tax burden on their inheritance.
How to Plan for Estate Taxes in NY
There are several ways that families can plan for estate taxes in New York. One common strategy is to establish a trust that can help to reduce the value of the estate and minimize the tax burden on heirs. Additionally, families may want to consider working with a financial advisor or estate planning attorney to develop a comprehensive plan that takes into account the specific circumstances of their estate.
Conclusion
Dealing with estate taxes can be a complex and stressful process for families who have lost a loved one. Understanding the rules and regulations that govern estate taxes in New York is essential in order to avoid any unexpected financial burdens. By planning ahead and working with professionals, families can ensure that they are prepared for any potential estate tax liabilities and can focus on honoring the memory of their loved one.
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