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WARNING:SOME OF THE SUGGESTIONS MADE IN THIS WEBINAR MAY BE ADVERSELY AFFECTED IF NY ADOPTS PROPOSED CHANGES IN THE NY TAX LAW RECOMMENDED IN THE 2014-2015 BUDGET

On January 21, 2014, Governor Cuomo submitted his Executive Budget for 2014-2015 to the New York State Legislature - Budget Bill A8559. The Bill includes significant changes to New York's estate and generation skipping transfer taxes as well as the income taxation of certain trusts.The Bill proposes to include gifts made after March 31, 2014 in a New York resident decedent's estate for New York estate tax purposes, if the decedent was a New York resident at the time of the gifts. Currently, gifts made during lifetime essentially escape New York estate tax if properly structured. New York residents who wish to avoid New York estate tax on lifetime gifts should complete those gifts before April 1, 2014.The potential estate tax savings from lifetime gifts should be balanced against other factors, including the potential loss of a "step up" in basis at death if gifts are made of appreciated assets.The Bill increases the New York estate tax exclusion amount in order to bring it largely into conformity with the federal estate tax exclusion amount. Over the next four years, the New York exclusion amount would be increased to $5.25 million, with the exclusion amount indexed to inflation thereafter. Additionally, the Bill gradually decreases the top New York estate tax rate from 16% to 10% by 2017. Please note that New York has not enacted the"portability"provisions that, for federal estate tax purposes, permit a surviving spouse to "inherit" a decedent's unused estate tax exclusion amount.If enacted, the Bill would take effect on April 1, 2014 and apply to estates of decedents dying on or after that date.

CHANGES TO INCOME TAXATION OF CERTAIN TRUSTS: "THROWBACK" TAX ON TRUST BENEFICIARIES

Trusts, known as "nonresident trusts," created by persons not domiciled in New York are generally exempt from New York income tax (other than on income from New York sources). Resident trusts are likewise exempt if they have no property located in New York, no New York trustees, and no income from New York sources. These rules have effectively made New York a state income tax haven for many trusts, even those with New York beneficiaries. This Bill is designed to prevent income earned by nonresident trusts or exempt resident trusts from escaping New York income tax. In general, the legislation is intended to tax New York resident beneficiaries on the accumulated income, when distributed, of both nonresident trusts and exempt resident trusts. A beneficiary would be allowed under the Bill to disregard income earned in years before 2011 or in years prior to the beneficiary first becoming a New York resident. Distributions made on or before May 31, 2014 would be exempt under the proposal. The legislation is being revised to make technical corrections andmay, perhaps, be further amended to reflect political compromises.A New York "throwback" tax on accumulated income would increase reporting burdens on trustees and the potential income tax liabilities of New York resident beneficiaries.The Bill also proposes to tax all New York resident incomplete gift, non-grantor trusts (commonly referred to as DINGs or NINGs, depending on whether they were created in Delaware or Nevada) as grantor trusts for New York income tax purposes. Accordingly, the Bill, if enacted, would attribute all income of such a trust to the New York resident grant or for New York income tax purposes. The trust would continue to be treated as a separate taxpayer for federal income tax purposes. The Bill does not, however, apply to income from such a trust if liquidated before June 1, 2014.

Allan R. Lipman, Esq.
Allan R. Lipman, Esq.



Member of the New York and Florida Bar
al@alipman.com
New York:
5500 Main Street Suite 306
Williamsville, NY 14221
Tel: 716-633-7860
Fax: 716-635-7142

Florida:
2255 Glades Road, Suite 324A
Boca Raton, FL 33431
Tel: 561-367-5028



Kelly V. Zarcone, Esq.
Kelly V. Zarcone, Esq.



Member of the New York and Florida Bar
kelly@wardbrenon.com
New York:
5500 Main Street Suite 306
Williamsville, NY 14221
Tel: 716-633-7860
Fax: 716-635-7142

Florida:
2255 Glades Road, Suite 324A
Boca Raton, FL 33431
Tel: 561-367-5028



John G. Brenon, Esq.
John G. Brenon, Esq.



Member of the New York Bar
johnbrenon@wardbrenon.com
New York:
5500 Main Street Suite 306
Williamsville, NY 14221
Tel: 716-633-7860
Fax: 716-635-7142


A SEMINAR IN THE PRIVACY OF YOUR HOME

When a surviving spouse of a former NY couple dies, the surviving spouse at some point may again become a New Yorker to be closer to children, etc. In this Seminar, we discuss how to minimize NY estate taxes for the estate of the returning spouse.

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Go to the Snowbirdguide.com companion online seminar: The 10 Questions Most Frequently Asked by Snowbirds.


A WORD OF CAUTION . . . This Seminar should not be viewed as legal advice or consultation and is made available with the understanding that the author and other persons associated with this publication are not engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. The author, publisher and other persons associated with this web publication disclaim any liability arising out of, or relating to, any reliance upon the matters contained herein.

The full text is not intended to be a fully, updated comprehensive discussion of a particular subject matter. It is only intended as a starting point for analysis of your particular facts with a professional advisor.


Note: The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, review Biographical Information and Concluding Session.


Allan R. Lipman and Kelly V. Zarcone, members of the FL and NY bar.

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