Legal Question in Wills and Trusts in New York
Say a father died in 2010, without a will nor any trust fund set up. Also say his total assets at his time of death is $5,000,000 ($4,000,000 in real estate and $1,000,000 in stocks)
If all his children (three adults) and his surviving spouse agree to bypass the Laws of Intestacy, is there a way to AVOID paying any New York Estate tax? Would it be as simple as agreeing that $4,000,000 would go to the surviving spouse, and only $1,000,000 would be paid out to the children in whatever ratio we agree (say $600,000 to one child and $200,000 to each of the other two)?
If so, then what ramifications with this have on the tax planning that must be done to minimize Estate taxes when the surviving spouse eventually passes.
Thank you.
2 Answers from Attorneys
Q. is there a way to AVOID paying any New York Estate tax?
A. Yes. The children can waive their right to inherit under the intestacy laws and the spouse receives all funds. Or, you may adjust in the ratios suggested in your question. A spouse does not pay inheritance tax.
Q. If so, then what ramifications with this have on the tax planning that must be done to minimize Estate taxes when the surviving spouse eventually passes.
A. Unfortunately, I am not qualified to properly answer this question. I would refer you to an accountant or an attorney that is qualified to conduct estate planning.
Mike.
I agree with Mike. However, the surviving spouse now has a potentially taxable estate unless Mom does her own estate planning. I suggest she create an irrevocable trust and fund it with her inheritance; partially using her current lifetime exemption and then utilizing annual gifting. I can assist you if you contact me directly, as a response here will be too extensive.
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