By The Law Firm of Figeroux & Associates

Estate taxes can significantly impact the wealth you leave behind for loved ones, especially in New York State. At the Law Firm of Figeroux & Associates, we specialize in helping clients navigate complex tax laws to protect their legacies. This analysis breaks down New York’s estate tax rules, explains how they differ from federal laws, and outlines actionable strategies to minimize tax burdens.

Understanding New York Estate Taxes
New York imposes its own estate tax, separate from the federal estate tax. Key details include:

• Exemption Threshold: For 2023, the New York estate tax exemption is $6.58 million. Estates valued below this amount generally owe no state tax.
• Tax Rates: Estates exceeding the exemption face progressive tax rates ranging from 3.06% to 16%.
• The “Cliff” Effect: If an estate exceeds 105% of the exemption ($6.909 million), the entire estate becomes taxable—not just the excess.

Federal vs. State Estate Taxes
While the federal exemption is much higher ($12.92 million per individual in 2023), New York’s lower threshold means many residents owe state taxes even if they avoid federal ones. Unlike federal law, New York does not allow “portability,” meaning spouses cannot transfer unused exemptions to each other without careful planning.

Step-by-Step Process: How Estates Are Taxed in New York

1. Valuing the Estate: Appraise all assets, including real estate, investments, business interests, and personal property.
2. Applying Deductions: Subtract debts, funeral expenses, and administrative costs. Charitable donations and transfers to spouses may also reduce taxable value.
3. Filing Requirements: Estates exceeding the exemption must file a New York State Estate Tax Return (Form ET-706) within nine months of death.
4. Tax Calculation: If the estate exceeds the threshold, taxes are calculated on the total value, not just the excess.

Strategies to Minimize New York Estate Taxes

1. Lifetime Gifting:
   • Gift up to $17,000 per recipient annually (2023) without triggering federal gift taxes.
   • Reduce your taxable estate by transferring assets to heirs during your lifetime.
2. Create Trusts:
   • Irrevocable Life Insurance Trusts (ILITs): Remove life insurance proceeds from your taxable estate.
   • Qualified Personal Residence Trusts (QPRTs): Transfer home equity to beneficiaries at a reduced tax value.
3. Leverage Marital Deductions:
   • Transfers to surviving spouses are generally tax-free, but proper planning is critical to avoid the “cliff effect” for the surviving spouse’s estate.
4. Charitable Giving:
   • Donate to qualified charities to reduce taxable estate value.
   • Establish charitable remainder trusts (CRTs) for income streams and tax benefits.
5. Plan for Business Owners:
   • Use family limited partnerships (FLPs) to transfer business interests at discounted values.

The Role of Figeroux & Associates
Our Brooklyn-based team provides tailored solutions to shield your assets:

• Estate Valuation & Compliance: Ensure accurate appraisals and filings to avoid penalties.
• Custom Trust Drafting: Design trusts that align with your family’s needs and tax goals.
• Cliff Effect Mitigation: Structure estates to stay below the 105% threshold.
• Probate Avoidance: Use tools like transfer-on-death deeds to streamline asset distribution.

Conclusion
Without proactive planning, New York’s estate taxes can erode your legacy. The Law Firm of Figeroux & Associates combines legal expertise with compassionate guidance to secure your family’s future. Contact us at 855-768-8845, visit www.askthelawyer.us, or text 718-986-4362 to schedule a consultation. Let us help you turn tax challenges into opportunities for preservation.