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New York State Gift Tax – Death Bed Gifting Coming Back?

Sweeping changes have been made to  New York’s estate, trust and income tax laws, however, some are set to expire on January 1st.


The 2014-2015 New York State Executive Budget (“budget”) legislation made sweeping changes to New York’s estate, trust and income tax laws. A large purpose of this legislation was to match the federal estate and gift tax exemption progressively until December 31, 2018 to $5,250,000. The increase was implemented on a gradual basis, but it included an income phase out, most commonly referred to as “the cliff.” New York estates valued over the basic exclusion amount of 105% will be fully taxable. Provisions commonly referred to as “Santa Clauses” have been frequently added to wills, which essentially authorize the executor or administrator to make charitable gifts or utilize other estate planning tools to reduce the decedent’s taxable estate below the basic exclusions amounts.  In 2017, the federal government increased their gift and estate tax exemption to $10,000,000 and for 2018, $11,180,000. Although there is now a discrepancy in the estate exemption amounts for federal and New York, one thing that remains unchanged is that NYS does not have a gift tax. 

However, the budget legislation did make a change to gifts because it added a “three year lookback” of gifts made by a decedent while they were a resident of New York State at the time the gift was made.[1] This change lies in Section 954(a)(3) of the NY tax law to add any taxable gifts of real or tangible property in New York three years prior to a decedents death to be included back into their gross estate for New York purposes.[2] It was further amended to clarify that this does “not include any gift of real or tangible property located outside of New York State at the time the gift was made, and will not be included in the computation of the New York gross estate for estates of individuals with a date of death on or after January 1, 2019.” Therefore, this law is only in effect from April 1, 2014 to December 31, 2018. 

It was clear that the legislature at the time was trying to add some sort of tax revenue to the budget by trying to eliminate death bed gifting and increase one’s taxable gross estate in New York. But as we can see this is set to expire in a few weeks on January 1, 2019.  For New York estate tax purposes, after January 1, 2019 a person can gift away all of their assets and it will not be included in their gross estate any longer.  Therefore this, coupled with the high federal estate and gift exemption for 2019 will make it unlikely for many New York State residents to owe any New York State or federal gift or estate tax. 

As we all know the political landscape and laws in this area have been changing rapidly on the state and federal level. Just because the three year look back is set to expire on January 1, 2019 for New York, does not mean things couldn’t change shortly after that. Sharon Klein, president of the Eastern Region for Family Wealth for Wilmington Trust, N.A., wrote an article that nicely lays out the new federal law changes and the intersection with New York as it relates to estate and gift tax. The Article is “NY’s Latest Legislative Session: What Passed, What Didn’t, What’s Next?” You can find a link to it here

[1] https://www.tax.ny.gov/pdf/memos/estate_&_gift/m15_3m.pdf

[2] NY TAX § 954(a)(3). 

Please check with your tax advisor, your Curran Wealth relationship manager,or contact Curran Wealth Management if you have any questions.  
518.391.4200
info@curranllc.com

The material contained in this article is for educational and informational purposes only.  The information herein is considered to be obtained from reference sources deemed reliable, but no representation or warranty is made as to its accuracy or completeness.  The contents of this article are based on the tax laws existing at the time of publication.  Tax laws are subject to continual change.  In addition, tax laws vary by state.  This article is not, and should not be regarded as tax advice.  The information contained in this article may not apply to your personal circumstances.  Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation.  If you would like a detailed analysis of your tax situation, with specific tax recommendations, you can discuss the possibility of pursuing a formal relationship with Hippo Tax Services.