Estate tax planning is the part of estate planning that deals with what the government takes before your family gets anything. In most states, only the very wealthy think about it. New York is different. The New York estate tax starts at $7,350,000 for deaths in 2026, and once an estate is 5% over that line, the exclusion vanishes and the entire estate is taxed from the first dollar. A house in Brooklyn or on Long Island, a retirement account, a life insurance policy and some savings will get an ordinary family there without anyone feeling rich.
This section is a survey of the tools we use to plan around both the federal and the New York estate tax. Each topic has its own page. Use the short self-assessment below to see which topics apply to you, check the 2026 numbers, and then read the pages that matter for your situation. When you are ready, call us at 212-233-1233 or email [email protected].
Which Topics Apply to You?
Answer four questions and we will point you to the pages that matter. Count everything: your home at market value, retirement accounts, brokerage accounts, business interests, and the death benefit of any life insurance you own. Nothing you enter here leaves your browser.
The 2026 Numbers
Every planning decision starts from these figures. The federal exemption was made permanent by the One Big Beautiful Bill Act in 2025 and is indexed for inflation, so the old “use it before it sunsets” urgency is gone. New York’s exclusion is less than half of the federal one, and New York has its own rules that the federal system does not.
| Item | Federal (2026) | New York (2026) |
|---|---|---|
| Estate tax exemption per person | $15,000,000 | $7,350,000 |
| Married couple, with planning | $30,000,000 | $14,700,000 |
| Top rate | 40% | 16% |
| Estate tax cliff | None (only the excess is taxed) | Whole estate taxed above $7,717,500 |
| Gift tax | Yes, same $15,000,000 exemption | None, but gifts within 3 years of death are added back |
| Annual exclusion gifts | $19,000 per recipient ($38,000 per couple) | Not added back |
| Portability of a deceased spouse’s unused exemption | Yes, by filing Form 706 | No |
| Generation-skipping transfer tax | 40%, with a $15,000,000 exemption | None |
| Return and deadline | Form 706, 9 months after death | Form ET-706, 9 months after death |
Read more on the New York estate tax and the estate tax cliff, or try the cliff calculator.
How We Approach Estate Tax Planning
The techniques on this page are tools, not a plan. A plan starts by measuring the problem and then applies the smallest set of tools that solves it. The order below is the order we work in.
- 1
Measure the estate the way the tax authorities will
We add up everything that counts, including life insurance you own, retirement accounts, jointly held property and gifts made in the last three years. Most people underestimate their taxable estate by the value of their insurance and their house.
- 2
Fix the marital plan first
For a married couple, an A/B trust and a timely portability election are the cheapest tax savings available. New York does not allow portability, so a couple that leaves everything outright to the survivor can waste $7,350,000 of New York exclusion.
- 3
Take life insurance out of the estate
An ILIT removes the death benefit from both the federal and New York estate. It is often the single move that pulls a family back under the New York cliff.
- 4
Give during life, at the right size and time
New York has no gift tax, so a completed gift made more than three years before death leaves the New York estate for good. Annual exclusion gifts, gifts to a SLAT, and gifts of discounted family LLC interests all work here.
- 5
Freeze the value of what is growing
A GRAT or a sale to a grantor trust moves future appreciation to the next generation while you keep the current value. These are for assets you expect to grow faster than the IRS assumed rate.
- 6
Skip generations where it makes sense
Wealth that will not be spent by your children should not be taxed again in their estates. A GST trust or dynasty trust, with GST exemption allocated, does that.
- 7
Do not save estate tax by creating income tax
Every gift of appreciated property gives up the step-up in tax basis at death. We compare the estate tax saved against the capital gains tax created before recommending any gift.
- 8
File the returns that protect the plan
A Form 709 with adequate disclosure starts the clock on the IRS’s right to revalue a gift, and it is where GST exemption is allocated. Skipping it can undo years of planning.
The Taxes
New York Estate Tax
Who pays it, the $7,350,000 exclusion, the 3.06% to 16% rate table, the three-year gift add-back, the ET-706 return and how the tax is computed on a New York estate.
The Estate Tax Cliff
Why an estate of $7,717,500 pays about $735,000 of tax while an estate of $7,350,000 pays nothing, and the six ways to stay on the right side of the line.
Generation-Skipping Transfer Tax
The flat 40% federal tax on gifts and bequests to grandchildren, the $15,000,000 exemption, direct skips, taxable terminations, and why allocation on Form 709 matters.
Capital Gains Tax vs. Estate Tax
The trade-off at the center of every gift: estate tax saved versus the step-up in basis given away, with the rates for a New York and New York City resident.
Planning for Married Couples
A/B Trust
The credit shelter trust and marital trust combination that lets a couple use both New York exclusions. Still the foundation of a New York couple’s plan even with a $15 million federal exemption.
Portability
How a surviving spouse inherits the unused federal exemption by filing Form 706, why it does not work for New York or for GST exemption, and when to file even if no tax is due.
Spousal Lifetime Access Trust
A gift to an irrevocable trust for your spouse and children that uses your federal exemption and escapes the New York estate tax, while your household keeps indirect access to the money.
Lifetime Gifts and Estate Freezes
GRAT
A grantor retained annuity trust passes the growth on an asset to your children with little or no taxable gift. Best for stock, business interests and other assets that are about to appreciate.
ILIT
An irrevocable life insurance trust keeps the death benefit out of both estates, funds premiums with annual exclusion gifts, and gives the estate cash to pay the tax that remains.
Family Discount LLC
Hold real estate or investments in a family LLC and give non-controlling interests at a 20% to 40% valuation discount. More value moves out of the estate per dollar of exemption used.
Form 709
When a gift tax return is required, when it is not, and the three reasons to file one anyway: adequate disclosure, GST allocation, and a clean record for New York’s three-year add-back.
Multigenerational Planning
GST Trust
A trust for your children that is exempt from generation-skipping tax, so what they do not spend passes to grandchildren without estate tax, New York estate tax, or GST tax.
Dynasty Trust
A GST-exempt trust built to last for generations, the New York rule against perpetuities, using another state’s law, and the terms that keep the trust useful to the people it is for.
Tax Basis
Step-up at death, carryover basis for gifts, which assets get a step-up and which do not, and how to plan so that the estate tax you save is not replaced by income tax your children pay.
Who Needs Estate Tax Planning in New York
Estates under $7.35 million
You have no estate tax problem today, and you should be careful not to create an income tax problem by gifting appreciated assets. Your plan is about probate avoidance, incapacity and Medicaid, and about keeping the step-up in basis. Watch the total, though: growth and life insurance move people into the next group without warning.
Estates between $7.35 million and $15 million
This is the New York-only zone, and it is where the cliff lives. The federal tax does not apply, but New York’s can take hundreds of thousands of dollars. Married couples need an A/B trust. Anyone with life insurance needs an ILIT. Gifts made more than three years before death, including annual exclusion gifts, take the estate down below the line.
Estates above $15 million per person or $30 million per couple
Both taxes apply and the federal rate is 40%. This is where SLATs, GRATs, family LLCs, sales to grantor trusts, and GST-exempt dynasty trusts earn their cost. The planning is about moving future growth out of the estate early, using both spouses’ exemptions, allocating GST exemption, and filing the returns that lock in the results.
Nonresidents with New York property
New York taxes real estate and tangible property located in the state even if the owner lives elsewhere. Holding the property through an LLC converts it into an intangible that New York does not tax in a nonresident’s estate.
Working With Us
We have been planning New York estates since 2008. We do the modeling, draft the trusts and entity documents, coordinate with your accountant and insurance advisor, prepare the Form 709 and, when the time comes, the estate tax returns. We serve clients in Manhattan, Brooklyn, Queens, the Bronx, Staten Island, Nassau, Suffolk and Westchester.
Call us at 212-233-1233 or email [email protected] to schedule a consultation. Bring a rough list of what you own and what it is worth, and we will tell you whether you have an estate tax problem and what it would take to solve it.
