Inheritance and Estate Taxes
New York state has no inheritance tax, but there is a state-level estate tax.

There are specific conditions to be met in requiring estates to file New York State Estate Tax Returns, though these requirements vary by the decedent’s date of death.

a) Decedent’s date of death on or after January 1, 2004

A New York State Estate Tax Return must be filed if any one of the following conditions is met:

(1) Decedent lived in New York state at the time of death and total of the “Federal Gross Estate, Federal Taxable Gifts and Specific Exemption” exceeds $1 million;

(2) Decedent did not live in New York state at the time of death, but the estate includes real or tangible personal property situated in New York state, and the total of the “Federal Gross Estate, Federal Taxable Gifts and Specific Exemption” exceeds $1 million;

(3) Decedent was neither a resident nor a citizen of the United States, bit the estate includes real or tangible personal property situated in New York state, and the estate is required to file a Federal Estate Tax Return.

In Cases #1 & #2, the estate should file the New York State Estate Tax Return Form TT-706, while in Case #3, the estate should file the non-resident version, Form TT-706NA.

b) Decedent’s date of death was on or after February 1, 2000, but before January 1, 2004

A New York State Estate Tax Return must be filed if both the following conditions are met:

1) Estate is required to file a Federal Estate Tax Return (either form 706 or 706-NA);

AND

2) Decedent lived in New York state or was a non-resident who owned real or tangible property in New York state at the time of death.

c) Decedent’s date of death was before February 1, 2000

The estate of New York state resident (at their time of death) must file a New York State Estate Tax Return if the combined total of their New York “Adjusted Gross Estate” and “Adjusted Taxable Gifts” is equal to or more:

Date of Death on or after Combined Total of Estate
May 26, 1990 (up to June 9, 1994) $108,333

June 10, 1994 (up to October 1, 1998) $115,000

October 1, 1998 (up to February 1, 2000) $300,000

Non-residents of New York state, including non-US citizens, who at the time of their death owned real or tangible property situated in New York state must file a New York State Estate Tax Return if the combined total of their New York “Adjusted Gross Estate” and “Adjusted Taxable Gifts” is equal to or more than the same limits that apply to residents, as shown in the table above.

Additional information on estate taxes can be obtained directly from the New York Department of Taxation and Finance or through a CPA or professional tax preparer.

Estate Tax Return Forms and Filing
There are different Estate Tax forms to be filed depending on the date of death, as outlined below:

If the date of death is:

1) before May 26, 1990, file Form TT-385 “New York State Estate Tax Return” or Form TT-102 “New York State Resident Affidavit”

2) on or after May 26, 1990 and before February 1, 2000, file Form TT-90 “New York State Estate Tax Return”

3) after February 1, 2000, file Form TT-706 “New York State Estate Tax Return”

Normally, the New York State Estate Tax Return (Form TT-706) should be filed within nine months from the decedent’s date of death, though an extension can be requested, if additional time is needed to complete the return. The services of a CPA or professional tax preparer is generally recommended, especially for complicated estates.

Estate Tax Waiver
For estates wherein the decedent has a date of death before February 1, 2000, and leaves financial or similar assets to an estate, the estate is usually required to obtain an “Estate Tax Waiver” for institution (i.e. bank, stockbroker, corporation or other entity) holding the assets. This is also called a “Consent of Transfer.” In the case of real property (i.e. land, building), the Estate Tax Waiver is called a “Release of Lien.” Estate Tax Waivers and Releases of Liens are not required when the decedent’s date of death is on or after February 1, 2000.

Additional information on estate taxes can be obtained directly from the New York Department of Taxation and Finance or through a CPA or professional tax preparer.

Federal Tax Code Impact on New York State Estate Taxes
New York state uses an individual’s “Federal Gross Estate” as the basis for determining the state’s Estate tax liabilities. The Federal Gross Estate includes all property an individual (decedent) owned, had control over or had an interest in on their date of death. Certain property transfers made within three years prior to the date of death are included in the Federal Gross Estate.

The Federal Internal Revenue Service (IRS) Code allows a deduction of inheritance and estate taxes paid to a state authority in calculating the Federal Taxable Estate when the date of death was on or after January 1, 2005. For a date of death before 2005, the IRS Code only allowed a credit against an estate’s federal estate tax liability. However, New York state does not conform to the federal tax code, so the deduction of the state’s estate tax is not permitted in calculating the Taxable Estate for New York state’s estate tax liabilities.

The Federal IRS Code provides a “Unified Credit” on estates with a value up to $1 million, exempting them from federal estate taxes. New York state conformed to the federal unified credit up to 2003, however, unlike the federal tax code, the unified credit “threshold” has not been increased for New York state and remains at $1 million. Therefore, some estates may have to file a New York State Estate Tax Return thought they are not required to file a federal estate tax return.

New York State Gift Tax
The New York state gift Tax was repealed and so only applies to “gifts” (i.e. property transfers) made prior to January 1, 2000. Gifts made after that date are not taxable.

The state Tax Department will impose a gift tax on property transferred by an individual (during their lifetime) to another party if the compensation received was less than the full value of the property. The tax would be computed on the difference between the compensation, if any, received and the full value of the property.

If the property transfer was made between independent parties in the “ordinary course of business” and without the intention of making a gift, then no gift tax is assessed.

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