Podcast Transcription:
WRVO Producer Mark Lavonier:
This podcast is part of the series Estate Planning Pro Tips, hosted by attorney Tim Crisafulli of Crisafulli Estate Planning and Elder Law, P.C.—an estate planning, probate, and elder law firm serving clients throughout Central New York. A former schoolteacher, Tim explains complex legal subjects in an easy-to-understand way. The commentaries focus on essential aspects of estate planning, such as wills, trusts, asset protection, long-term care, and probate. And now here's Tim.
Tim Crisafulli:
As we all know, there are many, many types of taxes to enjoy. You pay income tax on what you earn. You get to pay property tax on your house. You get to pay sales tax on what you buy. The list goes on.
One other type of tax is the estate tax. This is levied on the assets of a decedent. The federal government has one, and many states do, too. Here’s how the estate tax works: each one of us has a certain amount of assets that we are allowed to leave behind at the time of death without having to pay any estate taxes. It’s called the “Basic Exclusion Amount.” Only if a person leaves behind more than the “Basic Exclusion Amount” is an estate tax owed.
The good news is that the Basic Exclusion Amount is huge: the Basic Exclusion Amount for federal purposes in 2026 is a whopping $15,000,000.00. The Basic Exclusion Amount for New York State estate tax purposes in 2026 is $7,350,000.00. These numbers are adjusted each year, indexed for inflation.
So, there you have it: as long as you do not leave behind more than $7,350,000.00, you do not need to worry about New York State estate taxes. As long as you do not leave behind more than $15,000,000.00, you do not need to worry about federal estate taxes.
But, if by chance you do—and hey, there are Powerball drawings every week—then the tax liabilities are significant. The federal estate tax rate is up to forty percent. The New York State estate tax rate is up to sixteen percent. And for added excitement: New York State features something special: the estate tax “cliff”. Specifically, if the value of a person’s estate exceeds the basic exclusion amount by 5%, then the estate tax is levied on the decedent’s ENTIRE estate—right down to the first dollar—and not merely on the excess of the basic exclusion amount.
In sum, the overwhelming, overwhelming majority of people have nothing to fear about estate taxes. Such is the joy of being unburdened by the albatross of more than $7,350,000.00. But for those who do exceed that threshold, the liability is significant. Proper estate planning can reduce or even completely eliminate New York and federal estate taxes.
