Concerned about what the recent federal estate tax changes mean for your family's future? We're here to help you understand exactly how these new rules affect your estate planning New York needs.
The federal estate tax threshold has permanently increased to $15 million per individual starting in 2025. This means married couples can now pass up to $30 million to their heirs without federal estate taxes. While this sounds like great news, your New York estate planning needs remain just as important as ever.
Here's what you need to know: New York state maintains its own estate tax with a much lower exemption of just $7.16 million for 2025. Even more concerning, New York's estate tax includes a dangerous "cliff" that can eliminate your entire exemption if your estate exceeds the threshold by just 5%.
This significant difference between federal and state laws creates unique challenges that could still impact your family's financial future. We understand these rules can feel overwhelming, but you don't have to face them alone. Working with an estate planning attorney New York residents trust becomes essential to protect what you've worked so hard to build for your loved ones.
How the Big Beautiful Bill Changed Federal Estate Planning
President Trump's "Big Beautiful Bill" has made sweeping changes to federal estate tax laws, offering significant benefits for families planning their estates in New York. We want to help you understand exactly what these changes mean for your family's future.
The new $15 million exemption and what it means
The One Big Beautiful Bill Act permanently raises the federal estate tax exemption to $15 million per person starting in 2026. This marks a dramatic increase from the previous system where the exemption was scheduled to drop to approximately $7 million in 2026.
✅ This new higher exemption will continue to increase with inflation each year.
What this means for your family is simple: an individual can pass up to $15 million to heirs tax-free, and married couples can shield a combined $30 million from federal estate taxes. For most Americans, this effectively eliminates any concern about federal estate taxation.
"This permanent increase gives families unprecedented opportunity to pass wealth to the next generation without federal tax burden. Nevertheless, New York residents must remain vigilant about state-level estate taxes which remain unchanged by this federal legislation," notes Theodore Alatsas, Esq., Brooklyn Estate Planning Attorney.
Portability between spouses: what stays the same
An important aspect that remains unchanged is "portability" - the ability for a surviving spouse to use their deceased spouse's unused exemption. Essentially, if one spouse doesn't use their entire $15 million exemption, the remainder can be added to the surviving spouse's exemption.
Portability isn't automatic, though. To secure this benefit, the executor must file an estate tax return (Form 706) within five years of the first spouse's death. This filing is required even if no tax is due.
Why fewer families will face federal estate tax
Prior to these changes, federal estate tax already affected very few Americans. In 2019, only 8 out of every 10,000 people who died left estates large enough to trigger the tax. As a result of the increased exemption, this tiny percentage will shrink even further.
The impact varies by wealth level:
- Very wealthy ($40-50+ million): Still need comprehensive planning
- Moderate wealth ($15-30 million): Federal estate tax now likely eliminated
- Under $15 million: Federal estate concerns largely eliminated, but state taxes remain important
Contact us today to schedule a free*, no-obligation consultation to learn how these changes affect your specific situation and how we can help protect your family's future.
Why Estate Planning Still Matters in New York
The federal estate tax changes bring relief to many Americans, but New York residents face unique challenges that require our careful attention. The contrast between federal and state laws creates potential tax traps for families who aren't prepared.
New York's $7.16M exemption vs. federal $15M
The federal exemption reaches $15 million, but New York's exemption sits much lower at just $7.16 million for 2025. This significant gap means many estates will escape federal taxation yet still face substantial New York estate taxes.
Important: This difference creates a "danger zone" for estates valued between $7.16 million and $15 million - too small for federal tax but large enough for New York tax .
The estate tax cliff: what it is and why it matters
The most dangerous aspect of New York's estate tax is the infamous "cliff" provision. Federal tax only taxes amounts above the exemption, but New York's system can tax your entire estate if you exceed the threshold by just 5%.
For 2025, the cliff activates at $7,518,000. Exceed this amount by even $1, and your entire estate becomes taxable from the first dollar - not just the excess.
"I've seen families lose hundreds of thousands in unnecessary taxes by being just slightly over the cliff threshold. Proper planning could have saved them significantly," warns Theodore Alatsas, Esq., Brooklyn Estate Planning Attorney.
No portability in New York estate tax
Federal law allows "portability" - letting a surviving spouse use their deceased spouse's unused exemption. New York offers no such benefit. When the first spouse dies, any unused exemption simply vanishes.
How state-level taxes can still impact your legacy
Estates valued just over the cliff threshold face potentially devastating tax bills. For instance, an estate worth $7.52 million would owe $707,648 in New York taxes. Without strategic planning, your family could end up paying state taxes twice - once at each spouse's death.
We understand that protecting your family's future shouldn't feel this complicated. Your trust means everything to us, and we're committed to helping you create a plan that protects your assets from unnecessary taxation. Contact us today to develop a personalized estate plan that keeps your legacy in your family's hands, not the state's.
Trust Strategies That Now Make More Sense
After working hard your whole life, you deserve to keep as much of your wealth in your family as possible. With the changing estate tax rules, certain trust strategies now offer particularly powerful benefits for protecting what you've built.
Some of the many trust strategies we can help with include:
Non-grantor trusts and the $40,000 SALT deduction. The federal SALT (State And Local Tax) deduction cap of $10,000 can hit New York taxpayers hard. However, non-grantor trusts—which file their own tax returns—each qualify for their own separate $10,000 SALT deduction. Our estate planning attorney can help you divide high-value real estate among multiple non-grantor trusts, effectively multiplying this deduction up to $40,000 or more. Four trusts can potentially provide $40,000 in total SALT deductions versus just $10,000 individually.
ING trusts to reduce state income tax. Incomplete gift non-grantor trusts (ING trusts) offer a strategic approach for New York residents. These trusts can be established in zero-tax states like Nevada ("NING"), Delaware ("DING"), or Wyoming ("WING"). When properly structured, they help reduce or eliminate state income taxes on non-sourced income. For clients with significant investment income, ING trusts represent one of the most effective strategies for mitigating New York's high state income tax rates.
Spousal Lifetime Access Trusts (SLATs). SLATs allow one spouse to gift assets to an irrevocable trust benefiting the other spouse. This removes assets from your taxable estate while maintaining indirect access through your spouse. Any appreciation occurs outside your estate, potentially saving millions in future estate taxes.
Dynastic trusts for long-term wealth transfer. Given the higher federal exemption, dynasty trusts now make more sense for preserving family wealth across multiple generations. These trusts avoid estate, gift, and generation-skipping transfer taxes for as long as assets remain in trust.
Trust protectors and flexible provisions. Trust protectors provide crucial flexibility to otherwise unchangeable irrevocable trusts. These third parties can modify trust terms as laws change, replace trustees, or resolve disputes.
We promise to be there for you, offering our best advice and support on these complex trust strategies. Your trust means everything to us, and we're committed to helping you protect your family's financial future. Contact us today to schedule a consultation with an experienced estate planning attorney New York families trust.
Planning for the Future: Flexibility and Risk Management
Estate planning is about more than just taxes—it's about securing your family's future and making sure your wishes are followed. The new federal exemption creates opportunities, yet New York's unique rules demand careful attention.
Why planning now is better than waiting
Delaying estate planning often leads to unnecessary complications and financial losses [6]. Acting now lets you lock in current benefits before laws change. The IRS has confirmed there's no "clawback" for gifts made under today's higher exemptions, creating a true "use it or lose it" scenario.
Early planning minimizes tax liabilities and preserves generational wealth. We've seen how proper planning can make all the difference for families like yours:
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Provides peace of mind now
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Prevents family disputes later
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Secures your wishes legally
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Avoids state-appointed decisions if you become incapacitated
How to prepare for possible future tax law changes
The tax landscape constantly shifts with political changes. To safeguard against this uncertainty, build flexibility into your estate plan.
"The most effective estate plans include flexible provisions that can adapt to changing laws without requiring costly revisions. This adaptability is especially crucial given New York's complex and distinct estate tax system," notes Theodore Alatsas, Esq., Brooklyn Estate Planning Attorney.
Consider adding trust protectors—trusted individuals empowered to make minor modifications as needed. Moreover, clearly articulating your trust's purpose guides trustees even as circumstances evolve.
Asset protection beyond taxes
Estate planning provides crucial benefits beyond tax savings. Proper planning protects your assets from creditors, divorce proceedings, and financial mismanagement. Insurance strategies create additional layers of protection.
Working with an estate planning attorney in New York
Given New York's unique estate tax cliff and lack of portability, professional guidance becomes essential. An experienced attorney ensures your will is legally valid, minimizing the risk of disputes.
Remember: Without proper planning, New York's intestacy laws determine how your assets are distributed—likely not matching your intentions.
Your trust means everything to us, and we're committed to looking out for you and your loved ones. Contact us today to schedule a free consultation by calling our office or clicking our scheduling link to discuss your estate planning needs in New York.
Why you need an experienced New York Estate Planning Lawyer
At Alatsas Law Firm, we understand that estate planning in New York has become more complex with these recent federal changes. While the federal threshold has risen to $15 million, your New York estate remains vulnerable to significant state taxation due to our much lower $7.16 million exemption. This gap creates a challenging situation where you might avoid federal taxes but still face substantial state taxes.
New York's dangerous "cliff" provision could trigger taxes on your entire estate if you exceed the threshold by just 5%. This makes professional guidance essential for protecting what you've worked so hard to build.
Your trust means everything to us, and we're committed to helping you understand that even with federal changes benefiting many families, you still need strong planning strategies to protect your assets. The trust options we've discussed offer powerful tools to shield your wealth from unnecessary taxation while providing the flexibility your family needs as laws continue to change.
"Estate planning isn't just for the ultra-wealthy. Every New York family with a home, retirement accounts, and life insurance needs protection from our state's aggressive tax structure," emphasizes Theodore Alatsas, Esq., Brooklyn Estate Planning Attorney. "The difference between proper planning and no planning can amount to hundreds of thousands in taxes your family needlessly pays."
We promise to be there for you, offering our best advice and support. Waiting only increases risk, but by working with us to implement proper strategies today, you can secure your family's financial future against New York's complex tax rules.
Your family deserves the peace of mind that comes from knowing their future is secure, regardless of how tax laws continue to evolve. Contact us today to schedule a free consultation to discuss your estate planning needs in New York. We're here to help you protect your legacy and ensure your loved ones are taken care of.
Key Takeaways
While federal estate tax changes provide significant relief, New York residents still face critical estate planning challenges that require immediate attention and professional guidance.
• Federal vs. State Gap Creates Risk: Federal exemption rose to $15M, but NY's $7.16M exemption with a dangerous "cliff" can tax entire estates exceeding threshold by just 5%
• Strategic Trust Planning Now Essential: Non-grantor trusts, SLATs, and ING trusts offer powerful tax reduction strategies, especially with higher federal exemptions making advanced planning more valuable
• No Portability in New York: Unlike federal law, NY doesn't allow surviving spouses to use deceased spouse's unused exemption, making coordinated planning crucial for married couples
• Act Now Before Laws Change: Current benefits are locked in with no "clawback" risk, but waiting increases exposure to NY's aggressive tax structure and potential future law changes
• Professional Guidance Is Critical: NY's complex estate tax cliff and unique rules make DIY planning extremely risky - proper legal counsel can save families hundreds of thousands in unnecessary taxes
The bottom line: Even with federal relief, New York's estate tax remains a serious threat to family wealth that demands immediate, professional estate planning attention.
FAQs
Q1. How does the new federal estate tax exemption affect New York residents?
The federal exemption has increased to $15 million per individual, but New York's exemption remains much lower at $7.16 million. This means many estates may avoid federal tax but still face significant state-level taxation in New York.
Q2. What is the "estate tax cliff" in New York?
New York's estate tax cliff is a provision where if your estate exceeds the exemption threshold by just 5%, your entire estate becomes taxable from the first dollar. This can result in a substantial tax bill for estates just over the limit.
Q3. Are there any trust strategies that can help reduce estate taxes in New York?
Yes, several trust strategies can be effective. Non-grantor trusts can multiply SALT deductions, ING trusts can reduce state income taxes, and Spousal Lifetime Access Trusts (SLATs) can remove assets from your taxable estate while maintaining indirect access.
Q4. Why is it important to plan for estate taxes now rather than later?
Planning now allows you to lock in current benefits before laws change. There's no "clawback" for gifts made under today's higher exemptions, creating a "use it or lose it" scenario. Early planning also minimizes tax liabilities and helps preserve generational wealth.
Q5. How does New York's lack of portability affect estate planning for married couples?
Unlike federal law, New York doesn't allow surviving spouses to use their deceased spouse's unused exemption. This means that without proper planning, a couple could end up paying state taxes twice - once at each spouse's death. Coordinated planning becomes crucial for married couples in New York.
