MARKET TREND: States continue to make changes to their gift, estate and trust tax laws in an effort to increase revenue, in part by keeping wealthier residents from re-locating to low or no-estate tax jurisdictions and thus keeping more tax dollars in-state.
SYNOPSIS: Several states are contemplating modifications to their transfer tax laws, with New York, Maryland and Minnesota already passing changes. Perhaps most significantly, New York has (1) increased its estate tax exemption but phased-out its application for larger estates, (2) enacted a 3-year look back rule that adds gifts made within three years of death back into the New York gross estate, (3) eliminated the state income tax benefits associated with so-called DING and NING trusts, and (4) repealed its generation skipping transfer tax. The Maryland General Assembly has voted to gradually increase Maryland’s state estate tax exemption to eventually match the federal estate tax exemption by 2019. Minnesota has increased its estate tax exemption to $2 million, enacted a state QTIP election, and retroactively repealed its recently enacted state gift tax.
TAKE AWAY: Given the extent and significance of New York’s tax law changes, New York residents should promptly review their existing legacy and wealth transfer plans with their advisors and determine whether and what changes need to be made, particularly with regard to the phase-out of the New York estate tax exemption and the change in taxation of DING/NING trusts (which essentially takes effect on June 1st). Minnesota residents also may want to review whether they should modify their estate plans given the availability of a new state QTIP election and whether they are due a refund for any state gift taxes paid. Generally, as increases in state estate tax exemptions lessen the impact of state estate taxes for certain clients, the focus in planning will continue to shift from traditional estate tax plans to overall tax planning, including mitigation of the impact of federal and state income taxes. PRIOR REPORTS: 14-12
Click here to download a printable pdf.
SYNOPSIS: Several states are contemplating modifications to their transfer tax laws, with New York, Maryland and Minnesota already passing changes. Perhaps most significantly, New York has (1) increased its estate tax exemption but phased-out its application for larger estates, (2) enacted a 3-year look back rule that adds gifts made within three years of death back into the New York gross estate, (3) eliminated the state income tax benefits associated with so-called DING and NING trusts, and (4) repealed its generation skipping transfer tax. The Maryland General Assembly has voted to gradually increase Maryland’s state estate tax exemption to eventually match the federal estate tax exemption by 2019. Minnesota has increased its estate tax exemption to $2 million, enacted a state QTIP election, and retroactively repealed its recently enacted state gift tax.
TAKE AWAY: Given the extent and significance of New York’s tax law changes, New York residents should promptly review their existing legacy and wealth transfer plans with their advisors and determine whether and what changes need to be made, particularly with regard to the phase-out of the New York estate tax exemption and the change in taxation of DING/NING trusts (which essentially takes effect on June 1st). Minnesota residents also may want to review whether they should modify their estate plans given the availability of a new state QTIP election and whether they are due a refund for any state gift taxes paid. Generally, as increases in state estate tax exemptions lessen the impact of state estate taxes for certain clients, the focus in planning will continue to shift from traditional estate tax plans to overall tax planning, including mitigation of the impact of federal and state income taxes. PRIOR REPORTS: 14-12
Click here to download a printable pdf.
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