This post applies only to estates of those who died in 2012. Under the 2010 Tax Relief Act, estates valued at more than $5,120,000 ($10.24 million for married couples) are subject to federal estate taxes during 2012 and must file the Federal Form 706 estate tax return within the 9 month required period. Unless congress acts by January 1, 2013, the estate tax exemption will be decreased to $1,000,000 for those dying in 2013. New York State estate taxes are paid on estate assets that exceed $1,000,000, and the estate must file the New York Estate Tax Return Form ET-706. If a decedent who was not a New York resident owned real or tangible property in the State of New York at the time of death, the decedent’s estate must file a New York Estate Tax Return Form ET if the estate is valued at $60,000 or more.
A federal tax form 1041 and Schedule K-1 must be filed for estates that receive income over $600. The beneficiaries are responsible for paying the taxes on the income because it is passed through to them.
For those who are planning their estate, there are many ways to reduce estate taxes. For example, a person can gift up to $13,000 a year tax free to anyone they wish without having to pay federal estate taxes. Married couples are allowed to gift up to $26,000. That money does not have to be given directly to beneficiaries – it can be given to a trust for their benefit. To further maximize the benefit, the trust can buy life insurance for the beneficiaries.
Our attorneys can work with your accountant in preparing the estate tax returns. If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.