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Preparing for state estate tax in New York

While people in New York may be aware of the $5.45 million federal estate tax exemption, they also need to keep in mind that the state of New York has an estate tax as well. However, until 2004, it was possible to claim state tax against estate tax exemptions in a number of states. This meant that states got the benefit of estate tax payments without increasing a person's actual tax bill.

When this credit was repealed, it ended estate tax altogether in some states. However, in other states, this is not the case. New York is one of several states that is gradually increasing its estate tax exemption to bring it in line with the federal exemption.

However, there may be other ways around the state estate tax as well. Deductions might be available, and just as spouses are allowed to combine their federal deductions, this is generally permitted with state estate tax as well.

While many people may not need to be concerned about estate tax, there are a number of other aspects of estate planning that they might be unaware of that an attorney may be able to assist with. A person who made an estate plan several years ago might want to review the plan with an attorney because there may be new laws about tax planning in place that would make a different approach more advantageous. Furthermore, people often forget to update an estate plan to reflect a change in their assets or the births, deaths, marriages or divorces within the family. A person might want to structure the distribution of assets based on a person's age or arrange for the care of an incapacitated loved one, and an attorney may be able to explain how trusts might be the right choice in these cases.

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