Long Island estate planning attorney Seth Schlessel (https://www.schlessellaw.com/how-does-new-york-state-gift-tax-work/) of Schlessel Law PLLC has recently released an insightful article detailing the intricacies of New York State’s gift tax and how it affects residents. The article serves as a guide for individuals navigating the complex landscape of estate planning, particularly focusing on the impact of federal gift taxes in New York.
The informative piece by the Long Island estate planning attorney explores the absence of a direct state-imposed gift tax in New York. Schlessel clarifies, “While New York taxpayers can give gifts without a state-specific gift tax, they must remain aware of the federal implications and the three-year look-back provision that New York employs.” The provision refers to the inclusion of gifts made within three years of a taxpayer’s death in the New York estate tax computation, a critical detail for those in the midst of planning their estate.
The article delves into the federal gift tax regulations, which impose taxes on gifts that surpass a certain threshold. The Long Island estate planning attorney explains the 2024 annual federal gift tax exemption, which stands at $18,000, and describes how the lifetime gift and estate exemption, now at $13.61 million, influences a taxpayer’s obligation to pay taxes.
Schlessel also discusses the complexities of gift tax returns, the unlimited marital exemption available to U.S. citizen spouses, and the different tax rules that apply to non-American citizen spouses. “Understanding these rules is crucial for effective estate planning,” says Schlessel. He also highlights the exceptions where gift tax would not apply, such as payments for medical or educational expenses, as well as donations to political or charitable organizations.
One of the pivotal points in the article is the explanation of the New York 3-year clawback rule. Schlessel emphasizes that if the donor passes away within that period, the last three years of gifts are included in the estate tax calculation. This rule underscores the importance of considering the timing of significant gifts and their potential impact on estate taxes.
The Long Island estate planning attorney also examines the New York estate tax cliff, a critical concern for high-net-worth individuals. Schlessel explains that estates exceeding the exemption limit by more than 5% face the reality of the entire estate being taxable, not just the amount over the exemption. He discusses strategic responses to this “cliff,” such as the establishment of credit shelter trusts and charitable donations.
The article underscores the importance of engaging with an experienced estate planning attorney to navigate the intricate legal landscape. Schlessel encourages individuals to seek professional guidance to ensure that their estate is tailored to maximize tax benefits and reflects their current life circumstances.
For those who wish to learn more about estate planning strategies or have concerns about how the New York State gift tax may affect their estate planning, the release of this article serves as a valuable resource.
For individuals in New York, understanding the implications of gifting on estate taxes is crucial. The article from Schlessel Law PLLC provides a comprehensive overview that clarifies this complex area of tax law.
About Schlessel Law, PLLC:
Schlessel Law PLLC is a respected law firm based in Long Island, New York, dedicated to providing comprehensive estate planning services. Led by Seth Schlessel, the firm prides itself on crafting personalized estate plans that address the specific needs and goals of each client. With a thorough understanding of estate and tax law, Schlessel Law PLLC is equipped to guide clients through the complexities of estate planning, ensuring that their legacy is preserved and their wishes are honored.
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