Posted at: 05/05/2014 6:47 AM
Updated at: 05/05/2014 5:34 PM
By: Jennifer Mobilia
Living and raising a family in New York State isn’t cheap. New York has some of the highest property taxes, income taxes and gas taxes in the nation. New York also has an estate tax too. When you die, your family could owe the state hundreds or even thousands of dollars. In some cases, it is cheaper to die somewhere else.
The loss of a loved one is undoubtedly one of the most painful moments in life. When the funeral is over and you’re trying to figure out your loved ones items, it’s then when you get hit with a tax.
Philip Burke, Esq., estate attorney, Woods Oviatt Gilman, said, “I think the biggest problem, in general, is that there's a tax to begin with. Most states do not have any type of estate tax and New York is in the minority."
New York is one of only fifteen states with an estate tax, including Rhode Island and Connecticut. When you die, assets, like your house, car, land, jewelry, clothing, furniture, tools, computers, cash, bank accounts, retirement accounts, vacation homes, stocks, bonds and everything else you own, gets added up to create your estate.
You won’t believe how quickly that amount can add up. It could hit one million dollars.
Prior to April 1, if your estate totaled one million dollars or more, it was taxed up to 16 percent before it was passed on to your family. That's almost double the sales tax!
Locally, estate attorney Philip Burke says that threshold wasn't hard to meet.
Burke said, “Back in the glory days of Kodak and Xerox, you would have people who would have four, five or six million dollars of life insurance. They'd have three or four million or more in their retirement accounts or their 401k."
Estate attorney Christen Bruu says, many of her clients are completely surprised by this tax.
Relief is on the way, but for many older New Yorkers and their children and families, it is too late.
Christen Bruu, Esq., estate attorney, Woods Oviatt Gilman, said, “If it just means dotting a few I's and crossing a few t's to actually become a Florida resident, many will take that extra step because they know dying in New York will cost them an estate tax."
Florida is one of many states that don’t have an estate tax.
On April 1, the threshold was increased to just above two million dollars. It gradually increases to five million in 2019. That means, if a loved one dies between now and April 1, 2015 and the estate is worth $2,200,000, the state would take $114,800.
Attorneys say you can reduce the tax burden through lifetime gifting, trust funds and purchasing life insurance to cover the tax.