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New York State Gift Tax – NYS Extended the 3 Year Look Back

Legislative changes and market conditions have created a need for review of wills, gifting and estate planning documents to make sure your wishes are carried out.  The “look back rule” has been approved by New York State.  What does this mean for gifting to beneficiaries in your estate plan…

In early December, we wrote an article on a NYS gift tax law that was set to expire on January 1, 2019 [New York State Gift Tax Death Bed Gifting Coming Back].  The law that expired on January 1st was the “three year lookback” rule, found in section 954(a)(3) of the NY tax law which added any gifts of real or tangible property made in New York three years prior to a decedents death back into their gross estate for New York tax purposes.  If NYS did not include any changes in the 2020 Fiscal Year Budget for New York estate tax, a person could have gifted away all of their assets and it would have not be included in their gross estate; coupled with the high federal exemption, many taxpayers would have been able to gift their assets away free of estate tax.

In the late hours of March 31, 2019, when the NYS budget was finalized, lawmakers included an extension of the original three-year look back rule.  For months we have been in limbo as to whether or not NYS would extend the three-year lookback, originally designed to deter death bed gifting in the state, essentially creating a gap between the large federal estate tax thresholds and NYS.  “This gap revives the need for the limited gift add back in order to prevent revenue losses from deathbed gifts.”[1] The law which was included in the NYS Fiscal Year 2020 Budget, extended the original provision found in section 954(a)(3) of the NY tax law from January 1, 2019, to January 1, 2026.[2]The law also included a retroactive provision making this specific section in effect for decedents dying on or after January 1, 2019, although the budget didn’t pass until April 1, 2019.[3]

[1] http://www.nysba.org/Sections/Tax/Tax_Section_Reports/Tax_Section_Reports_2019/1413_Report.html

[2] FY 2020 New York State Executive Budget, Revenue, Article VII Legislation, Subpart F, Section 1, https://www.budget.ny.gov/pubs/archive/fy20/exec/artvii/revenue-artvii.pdf

[3] Id at Section 4.

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. It is not, and should not be regarded as “investment advice” or construed as a “recommendation” or an offer to buy or sell a security.  CIM, LLC does not provide tax or legal advice.  No one connected with CIM, LLC can ensure tax consequences of any transaction.  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.