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NYS Estate Tax Changes Spell Opportunity

Yesterday, New York State made sweeping changes to its estate tax laws with the passage of the state budget.

The "exclusion amount" for state residents dying on or after April 1, 2014 will be $2,062,500. The exclusion amount will increase as follows:

April 1, 2015 - $3,125,000
April 1, 2016 - $4,187,500
April 1, 2017 - $5,125,000

Starting January 1, 2019, the State exclusion amount will follow the federal exclusion amount, which is currently $5,340,000, but is indexed for inflation.

Gifts made within 3 years of death are added to the taxable estate. This does not apply to gifts that were made prior to April 1, 2014. Gifts made on or after January 1, 2019 will not be added to the taxable estate.

In addition to the foregoing changes, a perceived loophole was closed that allowed certain trusts established by New York residents to escape New York State income tax if the trustees were outside New York and the assets were located outside New York.