Do I Need a New York State Estate Tax Closing Letter?

In New York, if the gross value of an estate is over $1,000,000, you should look into filing taxes for the estate. Estate taxes, if due, are one of the highest priority payouts that must be made when probating an estate, right behind paying for funeral expenses and New York estate attorney’s fees. Paying estate taxes holds priority over all other estate debts, such as credit card bills and medical bills, and even any gifts left to relatives in the will.

In order to close probate, the executor or administrator needs to prove to the Surrogate’s Court that all of the debts of the estate were paid, including the estate taxes. In order to do this, the executor needs to get what is called a “closing letter” from the New York State Tax Department. Regardless of whether or not the decedent had an estate over $1,000,000, the executor must obtain this letter.

A tax closing letter is a letter from the state which either confirms that all estate taxes are paid in full or that none are owed. It is obtained by filing a tax return with the New York State Tax Department. The return must be filed within 9 months of the date of death and must be submitted along with the federal tax return. While in some cases, there can be extensions to file this paperwork or pay the taxes owed, this extension is rarely for over six months unless there is some sort of special circumstances.

If the estate value is low enough that no taxes are owed or complete payment is sent to the New York Tax Department, a closing letter will be sent to the executor or the New York estate attorney representing the executor within 4-6 months. Once this is received, the estate can officially be closed once every other creditor and beneficiary is paid, assuming that there are no other issues such as disputes with creditors or a dispute related to the estate.

Payment of estate taxes is considered one of the most important duties of an executor or administrator. If done wrong, real problems can arise for the executor. The executor or administrator is duty-bound to make sure that all taxes are paid before any other property is distributed to beneficiaries or whatnot. If by chance, the executor or administrator did not calculate taxes correctly or did not pay the proper tax for some other reason, he or she could be held personally liable for any amount owed if there was additional money or property distributed that could not be retrieved. This could be a significant amount of money in many cases, considering that the amount of estate taxes can often be high.

When it comes to any estate, the wisest move when you are the executor is to make sure that you have a skilled New York estate attorney on your side to make sure that there are no issues, such as running into trouble when it comes to estate taxes. Call the Law Offices of Albert Goodwin today at (212) 233-1233.