| When the marital estate exceeds the New York State estate tax exemption…read on:
READER QUESTION:
I recently read the answer that you gave to someone regarding estate tax on assets left to adult children. If my husband and I have assets in excess of $7.35 million total together, and we each have about half of that amount in traditional and Roth IRAs, if we leave equal amounts to each of our 4 children upon our death, will they have to pay estate taxes? For example, if I predecease my husband and I designate my 4 children as the beneficiaries of my IRAs that total $4 million, will there be estate taxes due on the $1 million that each child receives? Thank you!
MY RESPONSE:
First, do not do anything without talking to me first. You need comprehensive estate planning to reduce and/or eliminate your estate tax exposure, and this requires more reflection on your entire situation.
However, the simplistic answer is that if you leave less than the amount of the New York exemption to your children (potential tax absorbed in the exemption) and the balance to your spouse (unlimited marital deduction), then you will pay no tax at the first death. Giving your children the $4 million in IRAs may not be the best plan (or might be), but it will incur no estate tax. There still may be a tax at the second death if the second spouse to die leaves more than the New York exemption.
I hope this helps. |
