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New York & North Carolina

How Do Taxes Affect Estate and Probate Litigation in New York?

Parisi, Coan & Saccocio, PLLC

When it comes to estate and probate litigation in New York, it’s vital to understand the impact of taxes. These financial considerations can significantly affect the distribution of assets and the resolution of legal disputes. Here are some factors to consider when dealing with taxes in estate and probate cases in New York.

1. Estate Taxes in New York

New York imposes its estate tax separate from federal estate tax laws. The taxable estate in New York can differ from the federal taxable estate, leading to unique tax consequences for state residents.

In recent years, New York has increased the estate tax exemption, which means that estates below a certain threshold are not subject to state estate tax. This threshold, however, is lower than the federal estate tax exemption, which can lead to estate tax liability for some individuals.

Estate taxes in New York can have a significant impact on the overall value of an estate. This, in turn, can affect the assets available for distribution among beneficiaries and the resolution of disputes.

2. Income Taxes in Estate and Probate Litigation

Income taxes also play a role in estate and probate litigation. The income generated by an estate, including income from investments, rental properties, or business interests, is subject to income tax.

The tax obligations of an estate may influence the decisions of beneficiaries and heirs. Resolving disputes often involves understanding and allocating these tax liabilities.

Planning and strategic decision-making in estate and probate litigation may be influenced by the desire to minimize income tax consequences for beneficiaries.

3. Gift Taxes and Inheritance Taxes

New York does not impose a state-level gift tax or inheritance tax, which can be a relief for residents. However, staying informed about federal gift tax laws and how gifts may impact the taxable estate is essential.

Gifts made during a person's lifetime can affect the estate’s value for tax purposes. Understanding the rules and exemptions for federal gift tax is essential for planning and litigation in New York.

4. Capital Gains Taxes

The sale of assets in an estate can trigger capital gains taxes. These taxes are relevant in estate and probate litigation, particularly when deciding to sell or distribute assets.

Capital gains tax implications can affect the distribution of assets and the resolution of disputes, as beneficiaries may have differing views on managing assets to minimize tax consequences.

Estate and probate litigation in New York is a complex process influenced by various tax considerations. If you are involved in estate and probate litigation, contact us for a free consultation at (914) 228-7448. Our expertise in New York's estate tax laws, income tax issues, and federal gift tax rules can help you make informed decisions, resolve disputes, and ensure a fair and equitable distribution of assets.