| Portability….read on:
READER QUESTION:
Is the New York estate tax exemption of $7.35 million per person or per couple?
MY RESPONSE:
Great question, and it is confusing because the answer is different for the Federal and state estate tax.
The Federal estate tax exemption is $15 million. Upon the death of the first spouse, the surviving spouse can ELECT (on an estate tax return) to, in essence, inherit their spouse’s exemption. As such, the surviving spouse would have a $30 million exemption. This concept is called PORTABILITY.
New York does not have a portability provision, so each spouse is limited to his or her own $7.35 million exemption. If the first spouse to die leaves everything to the surviving spouse (tax-free, unlimited marital deduction), then that exemption is lost, and the surviving spouse is limited only to their own exemption. If the first spouse to die leaves assets to someone other than the surviving spouse (to the kids or a by-pass trust), those assets can use the first spouse to die’s exemption.
Therefore, with proper planning, couples in New York can exempt $7.35 million x 2, but proper planning must be in place before the first spouse dies.
See you in the office. |
