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The Rockaway Times
By DeidreM. Baker, Esq.
In March of 2014, New York
State enacted legislation, Chap-
ter 59, which resulted in signifi-
cant changes to the state’s estate
and gift tax laws. These changes
were important because they had
a potential effect on estate plans
already in place and estate plan-
ning moving forward. Effective
April 1, 2016 the New York State
estate tax filing threshold will be
$4,187,500 for New York State
residents passing on or after that
Many people reading this arti-
cle may feel that these estate tax
changes donot apply to themgiv-
en the seemingly high threshold
for filing a return. It is important,
however, to understand what
your taxable estate includes be-
fore deciding to dismiss the idea
of estate planning. Often when
individuals think of wrapping up
an estate, the image of going to
court comes to mind. While this
is sometimes the case, it does not
paint the complete picture of a
decedent’s estate.
The taxable estate of an indi-
vidual typically includes any as-
sets that he or she may have an
interest in at the time of death,
even if those assets do not pass
throughhis or her LastWill &Tes-
tament. Your gross taxable estate
may also include gifts you made
during your lifetime if those gifts
are in excess of the annual gift
exclusion, which is currently
$14,000 per person per year. For
example, if you own a 401k at the
time of your death that lists your
spouse as the primary benefi-
ciary, the value of the account is
includable in your taxable estate
when you pass despite the fact
that your wife does not need to
go to court to collect the funds in
the account.
The IRS allows individuals to
reduce the sizeof their taxable es-
tates using one ormore of a select
few deductions. The most well-
known and generous of these de-
ductions is probably the Marital
Deduction.When thefirst spouse
passes he or she is able to pass an
unlimited amount of assets to the
surviving spouse tax free, provid-
ed the surviving spouse is a U.S.
citizen. Although it is tempting
for a married couple to rely on
this deduction when planning
their estates, it may create issues
for the surviving spouse in the fu-
Estate planning is critical for
all families, not only those who
are seeking to avoid estate tax.
Your current financial situation
may lead you to believe that you
neednot plan for estate taxes, but
you would be doing yourself and
your heirs a disservice for several
reasons. Most obviously, no one
knows what the future will bring
and what makes sense for your
family today may not hold true
several years down the road. Ad-
ditionally, planning can be done
now that will leave your family
with more options at your pass-
ing, reducing both your potential
tax liability and their stress. This
planning can be as simple as exe-
cuting a Last Will and Testament
with provisions authorizing your
executor tomake a charitable gift
in order to reduce your estate.
While these changes will allow
many to avoid estate tax, as New
York’s exclusion amount contin-
ues to rise, estate planning has
become increasinglycomplex. It is
important for individuals to regu-
larly review estate plans with their
attorneys to ensure that they are
maximizing the gifts they are leav-
ingbehindfor lovedonesbyavoid-
ingheavy taxes where possible.
Deidre M. Baker is an associate
attorneywith the lawfirmof Brady
&Marshak, LLP.The attorneys can
be reached at (718) 738-8500.
The foregoing information is
intended for information pur-
poses only and should not be
construed as individual legal ad-