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How does the inheritance tax work in New York?

One importance piece of estate administration that any personal representative handling a Rochester, New York, estate will have to resolve is whether an estate will have to consider and pay an inheritance tax. Like many other states, New York has an inheritance tax which has to be paid even if an estate will not be assessed the federal estate tax.

New York 's inheritance tax, which is more appropriately called an "estate tax," is based in part off of the federal estate tax in that a New Yorker's "gross estate" under federal law also serves as the taxable estate for New York estate tax purposes. The taxable estate is the calculated value of a person's estate that is subject to tax. Under New York law, certain gifts a deceased person made shortly before death may also be included in the taxable estate.

As with the federal estate tax, New York offers what it calls a "basic exclusion amount," currently $5.25 million. An estate worth less than $5.25 million will not be assessed any estate tax because the value of the "taxable estate" is zero. Otherwise, tax rates get progressively higher proportionate to the value of the estate, with the most valuable estates being taxed at 16 percent.

As with other "progressive" taxes, it is important to remember that the tax rates get higher "on the margin." This means that a taxable estate worth more than $10.1 million only has to pay the top rate of 16 percent on every dollar above the $10.1 threshold. It is not the case than an $11 million taxable estate must pay 16 percent but a $9 million estate only pays 14.4 percent on every dollar.

Figuring the estate tax can be complicated, especially since it often depends heavily on how one values property. It is often a good idea to get the assistance of a qualified New York estate administration attorney for help with New York estate tax issues.

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Weinstein & Randisi
290 Linden Oaks, Ste. 200
Rochester, NY 14625

Toll Free: 800-768-1780
Phone: 585-310-1578
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