Estate planning rules in New York
Key takeaway
New York estate planning addresses trust residence, property transfers, fiduciary obligations and estate tax elections. The rules concern property transferred during an owner's lifetime, specific property left at death, the administration of trusts and estates, and the treatment of trust property associated with a surviving spouse.
Trust residence and income tax
New York treats an irrevocable trust as a resident trust if it holds property of a person domiciled in New York when the property was transferred to the trust. New York treats a revocable trust's residence as changing when the trust becomes irrevocable if the grantor changed domicile to or from New York before that point.
A New York resident trust can be exempt from New York income tax if all trustees are domiciled outside New York, all trust property is outside New York, and the trust receives no New York source income. The New York Department of Taxation and Finance may treat people with trustee-like powers, including powers over investments or distributions, as trustees. A distribution advisor domiciled in New York could cause a trust to fail the condition concerning trustee domicile.
Estate tax and marital elections
New York lists a basic estate tax exclusion amount of $7,350,000.
A New York estate may elect a qualified terminable interest property (QTIP) marital deduction on a pro-forma federal estate tax return attached to the New York State estate tax return. A New York QTIP election is irrevocable. New York includes the QTIP property in the surviving spouse's estate under that election.
Thresholds and rates change. Check the state's own current figures.
Completed gifts and specific devises
A completed gift in New York has three essential elements.
- The donor has the intent to make the gift.
- Delivery occurs.
- Acceptance occurs.
Property delivery and fiduciary obligations
New York recognizes delivery of a gift through a written document evidencing an actual transfer of ownership at that time. A specific devise in New York generally adeems when the item no longer exists at death. New York does not substitute proceeds for that item.
New York treats a trustee and an advisory committee acting as a de facto co-trustee as sharing a fiduciary obligation to manage assets consistently with the trust's stated purpose. An advisory committee's broad authority in New York does not extend to action contrary to that purpose.
A New York trustee may be liable for following an advisory committee's investment direction when there is reason to believe the committee is not fulfilling its fiduciary duty. A New York court held an exoneration clause void because the clause attempted to make the trustee completely unaccountable to the advisory committee.
A New York lifetime trust's exoneration clause does not shield a trustee from liability for wrongful negligence, impermissible self-dealing, bad faith or reckless indifference.
Thresholds and rates change. Check the state's own current figures.
Common questions
What digital information has a New York court disclosed to an estate administrator?
A New York court directed disclosure of a decedent's contacts and calendar information to the estate administrator. The New York court's disclosure direction excluded the content of the decedent's email messages.
What accounting rights apply to a New York revocable trust's administration before death?
A New York court held that a remainder beneficiary generally lacked standing to compel an accounting for a revocable trust's administration before death. A grantor's release in New York may waive the grantor's own accounting right without clearly and unambiguously waiving the rights of another trustee or trust beneficiaries.