It is no secret that New York state taxes are high, complicated, and time-consuming to manage. While the tax laws are complex, they also have specific deadlines that must be met to avoid significant penalties. Therefore, any person or entity who is involved in a dispute involving the administration of a New York estate should consult an estate tax planning attorney immediately.
A team of NY Trusts & Estates lawyers can have extensive experience with New York estate tax litigation and related matters. Whether the dispute involves an alleged breach of fiduciary duty, an issue with New York probate laws or tax matters such as the revaluation of real property, consulting with an estate tax planning attorney can provide you with the necessary legal expertise.
A New York probate attorney will review the facts of your case and advise you on the best course of action for your individual situation. We have a deep understanding of New York probate law, including rules and regulations that apply to the management of an estate. An estate tax planning attorney will work diligently to resolve the dispute in a timely manner while protecting your rights.
One of the most common reasons for disputes over an estate is when beneficiaries or creditors feel that a fiduciary has not fulfilled their duties. A breach of fiduciary duty is a serious matter and can result in the personal representative being removed from the role, or even being arrested. An estate tax planning attorney can guide you through the process, ensuring that you understand the legal implications and helping to defend against allegations of breach.
When a person dies, the personal representatives or administrators must do their best to gather all the information necessary to make an accurate determination of the value of the estate and the amount of any taxable assets. This can include gathering financial statements, appraisals, and other documentation to prepare the New York estate tax return. Engaging an estate tax planning attorney during this process is imperative to ensure that all legal requirements are met.
It is important to note that a surviving spouse can receive up to $50,000 of the deceased spouse’s estate without paying any New York state inheritance tax. This right is known as the elective share. In order to safeguard your claim to the elective share, it is vital to promptly contact a knowledgeable New York estate tax planning attorney.
The more assets in an estate, the greater the opportunity for conflicts between interested parties. Whether the dispute involves a disagreement on a percentage distribution, a challenge to a will or testamentary gift, or an inheritance tax audit, a skilled New York estate tax planning attorney can be instrumental in the process of resolution.
In 2020, New York collected $5.3 billion in estate and inheritance taxes, which is less than a tenth of its state and local general revenue. However, disputes do arise for all types of estates. Regardless of the size of the estate, a knowledgeable New York estate tax planning attorney can help navigate any legal proceedings.
The New York State Department of Taxation and Finance has one of the nation’s most sophisticated residency audit programs. And with the recent changes in federal tax law that limit deductions for state and local taxes, high earners from high-tax states like New York are likely to become the focus of residency investigations. Consultation with an estate tax planning attorney could provide guidance in managing these potential risks.
Residency audits typically follow a pattern: the auditor starts by reviewing records of income (like W-2s, K-1s, etc.) and then reviews the supporting expenses that were claimed on the return. Expenses that are usually reviewed include property taxes, sales and use tax, and personal service expense. Engaging an estate tax planning attorney during this process can help ensure that all legal standards are met and assist in defense against unjust claims.
If the auditor suspects that an item on the return is not supported, he may then request additional information or schedules. He also reviews a taxpayer’s business practices and the way that assets were purchased or sold, such as real estate transactions and business purchases. An estate tax planning attorney can provide expertise in these complex areas, ensuring that the taxpayer's interests are protected.
Audits are often triggered by statistical anomalies that are detected by computerized scanning systems. Other times, the auditor may look for inconsistencies on a return or differences between the taxpayer’s returns and those of others with similar items or situations. Utilizing an estate tax planning attorney at this stage could identify and resolve these issues early, potentially avoiding an extended audit.
During the interview, the auditor will ask the taxpayer to describe how her current and former residences are used. He will look for evidence such as utility bills, phone records, and bank statements. He will also ask the taxpayer to explain her actions and intentions in leaving her previous community and moving to a different community. An estate tax planning attorney can prepare the taxpayer for these questions and develop a strategy to present the case effectively.
The auditor will then compare her answers to the laws and regulations governing residency in New York. If the auditor determines that the taxpayer does not meet statutory residency requirements, the taxpayer will be subject to a tax liability determination. In most cases, statutory interest will be added to the amount of tax owed.
If you are subject to a state or IRS audit, contact an experienced NY tax professional to help guide you through the process. An experienced tax pro can reduce your stress and anxiety, minimize your tax liability, and protect your rights. They can also assist with estate tax issues. In both cases, a skilled tax pro, such as an estate tax planning attorney, can ensure that your case is handled properly and within the proper time frames to prevent a tax lien or other serious consequences.
The State of New York imposes an estate tax on real and tangible personal property belonging to deceased residents of the State. While there are numerous planning techniques that can mitigate or avoid these taxes upon your passing, these strategies must be implemented during your lifetime. Consulting with an estate tax planning attorney can ensure that your specific needs and goals are met.
Unlike the federal estate tax, which only applies to assets that exceed your taxable exemption amount, New York's estate tax is levied on the entire value of your taxable estate, regardless of whether you are over the threshold. This creates a "cliff" effect that can catch families by surprise and significantly decrease your family's wealth. An estate tax planning attorney can help you understand and prepare for this unique aspect of New York law.
To help alleviate the potential impact of this cliff, many families consider setting up a "Santa Clause" provision in their Will or Revocable Trust. This provision allows for a charitable bequest that will only occur if your estate is valued at or above the New York estate tax cliff number. This is a popular estate planning strategy and can be used in conjunction with other New York estate tax planning methods. Collaborating with an estate tax planning attorney can ensure that this provision is properly drafted and executed.
In addition to the cliff, another factor that can impact New York estate tax liability is the lack of portability of the Federal exclusion amount between spouses. While many wealthy couples attempt to partially get around this by using joint revocable trusts, it is important to note that these types of arrangements do not fully take advantage of the New York state exemption and may cause more tax than necessary at your death. Consulting with an estate tax planning attorney in these cases is critical to maximize the benefits of New York's tax laws.
As such, it is highly advisable to speak with a knowledgeable New York estate tax attorney when creating your estate plan. New York estate tax laws are complex and changes in the underlying tax code can create unanticipated consequences for even the most well-planned estate.
New York estate taxes can be very high, and the state is not likely to reduce its rates in the future. However, the good news is that the New York estate tax is a credit against the federal estate tax and therefore does not increase the overall state and federal taxes due. For this reason, many individuals seek the guidance of an estate tax planning attorney to explore ways to minimize this burden.
While New York estate taxes are not the only concern for many of our clients, they are certainly a consideration. It is therefore very important to speak with a knowledgeable New York estate planning attorney to discuss your options.
In addition to enlisting the help of an experienced financial advisor, there are several other things you can do to minimize your New York estate tax liability. If you own real estate in New York or are a resident of the State, you should consider establishing a limited liability company (LLC) for that property. This type of legal structure can make the property a “financial asset” for purposes of New York estate tax and allow for greater flexibility in how you own your property.
New York Legacy Lawyers by Yana Feldman & Associates PLLC
132 32nd St, Brooklyn, NY 11232, United States
(718) 713-8080