Legal Question in Wills and Trusts in New York

Re: Inheritance Tax

New York does not begin to assess an estate tax until the entire estate has a value in the neighborhood of $1,000,000. Only the state where the decedent died and the state in which real estate is located will assess an estate tax.

If your gift was a specific gift mentioned in the Will, it may not share in the etate tax burden, if any.

California will not assess an estate tax on a New York estate merely because you live there.

Re: Inheritance Tax

It would be improper for any attorney to provide you with legal advice without having first reviewed all of the facts and circumstances of your particular matter.

However, I will try to provide you with some information.

For estates of persons who died on or after January 1, 2004, the estate must file a New York State estate tax return if the total of the federal gross estate, plus the federal adjusted taxable gifts and specific exemption, exceeds $1,000,000.

There are a number of items that must be included in the gross estate.

In addition, you should determine whether there is a Will that must be probated or whether you must initiate an Administration proceeding.

I would recommend that you consult with a New York attorney and an attorney in California. You should provide them with all of the facts and circumstances.

I hope that this information has been helpful.

Re: Inheritance Tax

Supplementing the prior answers, without knowing all of the facts, I will provide general answers. Usually the Will provides how any estate or inheritance taxes are paid and by whom. Traditionally, these taxes are paid by the estate out of estate assets and the inheritance is net of these taxes. The amounts of tax are usually based upon the size of the taxable estate. In some instances, the recipient is charged with the tax and they receive their inheritance net of these taxes, if applicable. Without seeing the language in the Will, I cannot give you a more specific answer. Separate from estate/inheritance taxes is the question of possible income taxes. While, again traditionally, an inheritance is not considered "income" for income taxes, there are exceptions as well, which depends upon the nature of what is inherited. For example, if the inheritance consists of proceeds of a retirement plan, IRA, annuity or similar asset that might have had tax-deferred benefits to the decedcent, the recipient becomes responsible for the deferred taxes, as ordinary income, the rate for which is determined by the taxable portion of the inheritance, as well as other taxable income of the person inheriting received in the year you receive the inheritance. Other examples may include interest (such as if a bank account was to be inherited and its value includes previously untaxed or post-mortem interest, stock with dividends accrued but unpaid, insurance proceeds with an interest component, savings bonds with accrued interest, etc.) Securities inherited may have appreciated in value and the appreciation may be taxed when they are sold, possibly at the favorable long-term capital gain rate. These answers again require more information to give you a more specific answer. Since the estate is located in one state and you reside in another, it is possible that 2 state returns may be required, usually with some credit in your state of residence for taxes paid elsewhere. Again, more information is needed.