Proposed Amendments to New York’s Estates, Powers and Trusts Law Regarding the Interpretation of Credit Shelter Bequests in Testamentary Documents

SUMMARY

The Estate and Gift Taxation Committee has drafted legislation to amend New York’s Estates, Powers and Trusts Law to provide a presumption that credit shelter bequests be construed to set aside the maximum amount that may be shielded from both federal and New York state estate taxes.  The suggested legislation, if enacted, would govern the interpretation of credit shelter bequests in testamentary documents in order to avoid unintended consequences caused by changes to New York tax law.  Recent changes to the New York Tax Law may create unintended consequences for decedents whose estate plans have not been updated. The inclusion of a credit shelter bequest now often triggers a state-level tax that exceeds both the effective tax rate under portability as well as, in some cases, the difference between the state and federal exemption amounts. The Committee believes that their proposed amendment will solve this issue.

OUTCOME

Introduced as A.3226 / S.6080 (NYS 2019)