Do Estate Taxes, Inheritance Taxes Apply in New York?

Even though you may designate specific property and assets to certain beneficiaries through your estate plan’s careful instructions, this does not necessarily mean they will receive or keep this full amount. Simply put, this is because there are estate and inheritance taxes. Without further ado, please continue reading to learn whether you must consider estate taxes and inheritance taxes when establishing your estate plan and how one of the experienced Putnam County asset preservation attorneys at the Law Office of Andres D. Gil, PLLC can help you better understand its implications.

What is the difference between estate taxes and inheritance taxes?

First of all, you must understand that estate taxes and inheritance taxes are not terms that can be used interchangeably. On the one hand, an estate tax is paid by your estate itself. On the other hand, an inheritance tax is paid by your named beneficiaries. Further, the estate tax rate has set thresholds based on the net value of your estate at the time of your death. Then, the inheritance tax rate has graduated levels that depend on your relationships with the named beneficiaries. Lastly, there are both federal and state estate taxes that may be paid to federal and state governments, while inheritance taxes are only applicable on the state level.

Do estate taxes and inheritance taxes apply in New York State?

An unfortunate thing about being a New York State resident is that you live in one of the few states that still imposes state estate taxes. The tax rate ranges greatly for this. For example, if your taxable estate is valued at less than $500,000, it may face a $0 base tax and a 3.06 percent taxable amount at the time of your death. Or, if your taxable estate is more than $10.1 million, there may be a $1.082 million base tax and a 16 percent taxable amount.

That said, if your total net worth is in the tens of millions range, you must be observant of the potential federal estate tax. Namely, as of 2025, this is imposed on estates worth more than $13.99 million for individuals and $27.98 million for married couples. Its rate may range from anywhere between 18 to 40 percent, depending on the deduced taxable amount.

On the bright side, though, you may not have to worry about burdening your named beneficiaries with a state inheritance tax. The only states that still observe this are Iowa, Kentucky, Nebraska, Maryland, New Jersey, and Pennsylvania.

Nonetheless, asset presvation tools within your estate plan are still vital. For one, an irrevocable grantor trust may place some of your assets outside of your estate and thereby not subject to estate taxes at the time of your death. In turn, this may reduce the overall value of your estate. At the very least, you may be able to reduce the base tax and percentage rates on your remaining property and assets.

To conclude, you must be fully equipped to enter your upcoming estate planning procedures. Your preparation is incomplete without hiring a skilled estate planning attorney in Putnam County. Contact the Law Office of Andres D. Gil, PLLC today.