Estate Planning — New York

Estate Tax Planning New York

New York imposes its own estate tax separate from the federal tax — with a harsh "cliff" provision that can dramatically increase liability for estates just above the exemption threshold. Morgan Legal Group provides strategic estate tax planning for New York families navigating both state and federal obligations, with a focus on preserving wealth for generations to come.

Overview

Understanding New York's Dual Estate Tax Burden

New York is one of only twelve states that impose their own estate tax, and it is among the most aggressive. Unlike the federal estate tax — which has a generous exemption exceeding $13 million per person in 2024 — New York's exemption is $6.94 million, and estates that exceed 105% of that threshold lose the exemption entirely, triggering tax on the full estate value from the first dollar. For New York City families with significant real estate holdings, investment accounts, or closely held businesses, this cliff can mean hundreds of thousands of dollars in avoidable tax if planning is not undertaken proactively.

Russel Morgan, Esq. and the Morgan Legal Group team work with New York clients at every wealth level to minimize exposure to both the New York State estate tax and the federal estate tax. The strategies available — credit shelter trusts, annual gifting programs, irrevocable trusts, valuation discount planning through family entities, and charitable techniques — are well-established and highly effective when designed and implemented correctly. Equally important is timing: the federal estate tax exemption is currently scheduled to sunset at the end of 2025, creating a narrow planning window that will not be available again if Congressional action does not intervene.

Estate tax planning is not only for the ultra-wealthy. A New York City couple who purchased a brownstone in Brooklyn twenty years ago, have accumulated retirement savings and investment accounts, and carry life insurance may find themselves with a taxable estate well above the New York exemption. Morgan Legal Group serves families across Manhattan, Brooklyn, Queens, the Bronx, Staten Island, Nassau, Westchester, and Suffolk counties — helping each family understand their exposure and implement the most appropriate strategies for their situation.

Planning Strategies

Proven Tools for Reducing Estate Tax in New York

FAQ

Estate Tax Planning — Your Questions Answered

What is the New York State estate tax exemption for 2024?
The New York State estate tax exemption for 2024 is $6.94 million. Estates below this threshold owe no New York estate tax. However, New York's notorious "cliff" provision means that if the taxable estate exceeds 105% of the exemption — approximately $7.29 million in 2024 — the exemption is completely phased out and the entire estate is taxed from the first dollar. This creates a perverse situation where an estate of $7.3 million can owe more tax than one of $6.9 million. New York estate tax rates range from 3.06% to 16% on estates above the exemption. Critically, New York does not recognize federal portability of the estate tax exemption between spouses — if the first spouse to die does not use their New York exemption through proper planning, it is permanently lost. Morgan Legal Group helps New York families structure their estates to make full use of both spouses' New York exemptions through carefully drafted trust provisions and coordinated lifetime planning. The New York exemption is indexed for inflation and increases annually, so planning should be reviewed each year to reflect the current threshold.
How does the federal estate tax exemption affect New York residents in 2024?
The federal estate tax exemption for 2024 is $13.61 million per individual ($27.22 million for a married couple using portability). Most New York families will not owe federal estate tax under current law — but this is expected to change dramatically at year-end 2025. The Tax Cuts and Jobs Act of 2017 doubled the federal exemption, and that doubling is currently scheduled to sunset on December 31, 2025, after which the exemption reverts to the pre-2018 level, adjusted for inflation — approximately $7 million per person. If the exemption sunsets as scheduled, hundreds of thousands of additional estates will become subject to the federal estate tax at a 40% marginal rate. This makes 2024 and 2025 a critical planning window for New York families with estates between $7 million and $27 million who wish to lock in the current higher exemption through irrevocable gifts or trust transfers before the window closes. Strategies such as SLATs and GRATs allow clients to capture the current high exemption while maintaining some degree of flexibility. Russel Morgan provides urgency-aware planning that accounts for the potential sunset without requiring clients to take irreversible steps they are not comfortable with.
What trust strategies reduce estate taxes in New York?
New York and federal estate tax reduction relies on a toolkit of trust strategies, each addressing different client circumstances and goals. The credit shelter trust is essential for married New York couples because New York does not recognize federal portability — the trust ensures that both spouses' New York exemptions are fully utilized. The ILIT removes life insurance proceeds from the taxable estate, replacing estate-tax dollars with tax-free insurance proceeds available to pay taxes or provide liquidity to heirs. The GRAT allows a client to transfer appreciating assets to an irrevocable trust while retaining a fixed annuity payment for a term of years — any appreciation above the IRS hurdle rate passes to beneficiaries estate-tax-free. The SLAT is an irrevocable trust that uses the gift tax exemption to remove assets from the taxable estate while the beneficiary spouse retains indirect access through discretionary distributions. The QPRT transfers a primary or vacation home at a discounted gift tax value while the grantor retains the right to live in the home for a fixed term. For clients with family businesses or investment real estate, the family limited partnership or LLC can achieve valuation discounts of 15–35% on transferred interests. Morgan Legal Group designs coordinated strategies using all of these tools for New York clients at every wealth level.
What is the annual gift tax exclusion and how can it reduce my New York estate?
The annual gift tax exclusion allows any individual to give up to $18,000 per recipient per year in 2024 without using any of their lifetime gift and estate tax exemption and without filing a gift tax return. For a married couple who split their gifts, the exclusion doubles to $36,000 per recipient per year. An annual gifting program is one of the simplest and most effective estate tax reduction strategies available, and it compounds powerfully over time. A couple with three children and six grandchildren can transfer $36,000 times nine recipients — $324,000 per year — out of their taxable estate without any gift tax cost or exemption usage. Over ten years, that is $3.24 million removed from the estate, plus all future appreciation on those gifted assets. New York does not have a separate gift tax, and gifts made during lifetime are not added back to the New York taxable estate — unlike at the federal level, where the three-year lookback on gifts of life insurance can be relevant. This makes annual gifting particularly powerful for New York estate tax planning. In addition to the annual exclusion, direct payments of tuition and medical expenses to educational and medical institutions are excluded from gift tax entirely with no dollar limit. Morgan Legal Group integrates structured gifting programs into every comprehensive estate plan for New York clients with taxable estates.
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Related Estate Planning Topics

Irrevocable Trusts Revocable Living Trusts Dynasty Trusts Grantor Trusts Life Insurance Trusts (ILIT) High Net Worth Planning Charitable Planning Wills vs. Trusts

Additional resources: morganlegalny.com — Estate Planning Overview

Act Before the Window Closes

Schedule Your Estate Tax Planning Consultation

Russel Morgan, Esq. helps New York families minimize estate taxes through proven, court-tested strategies. With the federal exemption potentially sunsetting in 2025, there is no better time to plan. Serving all five boroughs and surrounding counties.

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(212) 561-4299888-LAW-1315contact@morganlegalgroup.com