The addback of taxable gifts has been extended for estates of decedents dying on or after January 16, 2019, and before January 1, 2026.
FOR IMMEDIATE RELEASE / PRURGENT
The addback of taxable gifts has been extended for estates of decedents dying on or after January 16, 2019, and before January 1, 2026. An includible gift is any taxable gift under Internal Revenue Code (IRC) section 2503 that was made during the preceding three-year period ending on the decedent’s date of death and that is not already included in the decedent’s federal gross estate. That provision includes in a New York resident’s taxable estate the amount of any taxable gifts made by a person dying prior to January 1, 2019, reduced by certain carve-outs including for gifts made when a decedent was not a resident of New York, and gifts of real or tangible personal property having an actual situs outside New York state at the time the gift was made. However, taxable gifts do not include any gift made:
• when the decedent was not a resident of New York State; or
• before April 1, 2014; or
• between January 1, 2019, and January 15, 2019; or
• that is real or tangible personal property having an actual situs outside New York State at the time the gift was made.
New York State nonresidents should only include gifts if they were real or tangible personal property having an actual location in New York State, or were intangible personal property employed in a business, trade, or profession carried on in New York State. For decedents dying on or after January 1, 2019, and before January 16, 2019, there is no addback of taxable gifts. The Tax Law requires a New York qualified terminable interest property (QTIP) election to be made directly on a New York estate tax return for decedents dying on or after April 1, 2019. Any election made under this subsection is irrevocable. Any QTIP from a previously allowed New York marital deduction must be included in the surviving spouse’s New York gross estate, whether the QTIP election was made on the transferring spouse’s New York estate tax return or on a federal proforma return if an actual federal return was not otherwise required.
These legislative developments and current market conditions create (1) a window of opportunity for gifting and other estate planning strategies to permanently remove assets from the future federal and New York estate tax, and (2) a need to review existing wills and other estate planning documents to ensure that they continue to carry out planning objectives.