Estate Tax Mitigation

Estate Tax Mitigation Planning involves reviewing your asset composition and your goals to propose planning that mitigates your Federal and New York estate tax exposure.

Federal Estate & Gift Tax.  While often referred to as an estate tax, the federal structure actually combines both lifetime gifting totals and inheritance totals to determine someone’s estate tax obligation at death. Under Federal tax law, any person dying in 2026 is entitled to combined lifetime gifting and inheritance gifting of $15 million ($30 million for married couples). Therefore, someone who has gifted and passes away with combined less than $15 million ($30 million for married couples) is generally not subject to a federal estate tax.

Annual Exclusion Gifts. While most gifts given during your lifetime are included in the federal estate and gift tax, gifts below the “Federal annual exclusion amount” don’t count toward your lifetime Federal estate and gift tax totals. The Federal annual exclusion amount is set yearly and is $19,000 for 2026. For those who are concerned about exceeding the Federal estate and gift tax exemption at their death, annual gifting at or below the exclusion amount to multiple family members (or any beneficiary) over many years is one of numerous tools people use to decrease the value of their taxable estate at their death.

Determining the Value of an Estate. Generally, the fair market value of all assets you own or in which you retain an interest is included in your estate for federal estate tax purposes. Many assets one wouldn’t think of are also included, such as life insurance death benefits, assets passing by beneficiary designation, and certain trust interests. If you wonder whether an asset is included, the answer is likely yes, unless specific tax mitigation steps have been taken.

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Marginal Tax Calculations. Under federal law, if your estate value exceeds $15 million, you are subject to a 40% tax on the overage.

New York Estate and Gift Tax. In 2026, The New York estate tax is imposed on estates valued at more than $7.35 million per person. For New Yorkers passing away with less than $7.35 million, there is generally no New York estate tax due. Unlike the Federal gift tax, New York doesn’t combine lifetime gifting and inheritance. Instead, New York includes the value of all gifts made within 3 years of death when calculating the value of an estate for New York estate tax purposes. It is also important to note that New York does not allow doubling by married couples as can be done with the federal estate and gift tax, requiring strategic planning for New York families at this asset level.

The Cliff: Not Marginal Tax Calculations. In New York, if you exceed the allowed amount by 5%, the state imposes a 16% tax on your entire estate back to the first dollar as opposed to just the overage.

To learn more about estate tax planning or to discuss your specific needs, please schedule an appointment with Keren or Jaime using their booking links below.

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