Report on Proposed reforms to the New York State Estate Tax

SUMMARY

The Committees on Estate & Gift Taxation and Trusts, Estates & Surrogate’s Courts issued a report proposing a number of reforms to the State’s Estate Tax. The committees’ proposals would: 1) eliminate the “cliff” that applies to estates that are slightly above the estate tax exemption amount; 2) permit a separate state QTIP election where a federal estate tax return is being filed solely to make a portability election for federal estate tax purposes or in any other situation in which the executor would not be subject to penalties under the Internal Revenue Code for failure to file a federal estate tax return; 3) prevent New Yorkers who make taxable gifts subject to addback to their New York gross estate under Tax Law § 954(a)(3) from being penalized for federal estate tax purposes due to deduction limitations for state death taxes; and 4) permit a portability election for New York estate tax purposes so as to conform to the portability election for federal estate tax purposes.