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New York & North Carolina

NY Estate, Gift, and Generation Skipping Transfer Taxes


The federal government allows individuals to give a certain amount in tax-free gifts during their lifetime. These gifts might include money, property, or stocks. The amount you can give tax free, is your lifetime exclusion, and once you exceed that amount gift taxes apply. When someone dies, any assets left for the beneficiaries may also be subject to estate taxes. The “taxable estate” amount is the final value of the estate that is subject to the estate tax.

Transfers to grandchildren that exceed the exemption limits are subject to the generation transfer (GST) tax, which is in addition to gift or estate taxes. The GST tax prevents individuals from avoiding transfer taxes when they pass assets onto the next generation.

Expanded GST Tax Exemptions

The gift, estate, and GST tax exemptions were increased by Congress in 2017 to $10 million through 2025. The lifetime gift tax exclusion was expanded under the Tax Cuts and Jobs Act, and with an inflation adjustment in 2020 increased to $11.58 million for individuals and $23.16 million for a married couple. This means that the federal tax law applies the estate tax to any amount above $11.58 million for individuals and $23.16 million for married couples. The exclusion amount in 2021 increases to $11,700,000.

Decreasing Your Tax Bill

The unified tax credit is designed to decrease the tax bill of the individual or estate, which can be as high as 40% on amounts over $11,180,000. It can be used by taxpayers before or after death, integrates both the gift and estate taxes into one tax system, is adjusted for inflation, and has no income limit.

In addition, married couples can exercise a “portability” option using Form 4768. The portability option is a federal exemption that allows a surviving spouse to take the remaining estate tax exemption, up to $11,180,000, including past gifts. In other words, the surviving spouse can add their deceased spouse’s unused estate tax exemption to their own, effectively doubling the exemption. While this can be an effective tactic to reduce federal estate taxes when the second spouse passes, it does not help with state estate taxes.

New York Estate Tax

Although the high exemption amounts mean that most individuals will no longer be subject to the federal estate tax, there are exceptions. New York estates for example, may be subject to both federal and state taxes.

New York imposes a state estate tax on deceased individuals who are a resident of New York, or who have property physically located in New York. Federal estate tax may also apply to estates that exceed the federal exemption. In addition, not only does New York not have a portability option available to effectively double the exemption, but it also has a rule that prevents some estates from taking advantage of the estate tax exclusion that applies when an individual dies and their estate’s taxable amount is more than 5% of the exclusion amount. These estates are subject to paying taxes up to 16% in New York estate tax on the entire amount of the estate.

Reducing Estate Taxes

Parisi, Coan & Saccocio, PLLC, provides the highest quality personalized service, legal advice, and counseling to clients. Our attorneys have ever 65-years of collective experience are also Certified Public Accountants, making them uniquely qualified for complex estate and trust matters. If you would like to learn more about estate planning strategies that enable the transfer of wealth from one generation to the next while significantly reducing estate taxes, please contact our office at (914) 228-7448.