Previously we posted that some states were considering a phase out or at least an increase of their estate tax exemption to give residents an incentive to stay in state rather than flee to warmer, not to mention more economical, states to live out their golden years. New York was one of the states mentioned in the article, and the consideration became a reality. As a result of recent legislation, as of April 1, 2014 the exemption amount is $2,062,500 (up from $1,000,000) and will continue to increase each subsequent April 1, until it matches the federal exemption amount in 2019. The kicker, however, is that the legislation includes a “cliff”, which results in the loss of any exemption for those with a New York taxable estate whose value exceeds the New York estate exemption by 5%. To read more about the New York state tax legislation please see http://www.tax.ny.gov/pdf/stats/sumprovisions/summary_of_2014_15_tax_provisions.pdf.
New Jersey, however, continues to be an expensive place to die. While the repeal of the estate tax has been suggested by at least one senator as recently as June of this year, to make up for the lost revenue from the estate tax, the senator is proposing a millionares’ tax to increase the tax rate on household income over $350,000. As of now this does not seem to be gaining much momentum as Governor Christie has made it clear that he will not sign the bill.
It appears that despite legislative attempts, many individuals will not be escaping the onerous estate tax. Therefore, tax planning remains a crucial part of one’s estate plan.
– Nicole E. Russak, Esq.