In 2021, the New York estate tax exemption amount is $5,930,000. If an individual has over $5,930,000 of assets, then that individual will owe an estate tax at their passing. One planning technique for individuals to consider is to use a Credit Shelter Trust in estate planning documents. This planning tool is only for married couples.
The main benefit of a Credit Shelter Trust is to eliminate or lower the New York State estate tax. Currently, the top New York estate tax rate 16%. New York has what people refer to as a “Cliff Tax.” A cliff tax means that if an estate is $1 over 5% of the estate tax exemption ($6,226,500 in 2021) then that individual is taxed on their entire estate and not just the amount that is over the estate tax exemption amount. If the estate is less than 5% over the estate tax exemption then only the excess amount is taxed.
