Estate Tax Planning Attorney in New York & New Jersey

What Is Estate Tax?

Estate tax is a tax on the transfer of your assets to your heirs at death. The federal government and the State of New York each impose their own estate tax — calculated separately, using different exemption amounts and rate structures. You can owe one, both, or neither depending on the size and structure of your estate.

Understanding which tax applies to you — and how much — is the starting point for every estate tax planning engagement.

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New York Estate Tax: What Makes It Different

New York has one of the most aggressive state estate taxes in the country. Three features make it especially important to plan around:

**The low exemption.** New York's 2025 exemption is $7.16 million per person. Unlike the federal government, New York does not automatically adjust for inflation at the same pace, and — critically — it does not allow portability. When a spouse dies, their unused NY exemption cannot be transferred to the surviving spouse. Each person must use their exemption independently.

**The cliff.** This is New York's most dangerous quirk. If your estate exceeds 105% of the NY exemption (approximately $7.52 million in 2025), the exemption disappears entirely. Your entire estate — from dollar one — becomes taxable. An estate of $7.6 million could pay more in NY estate tax than one valued at $7.15 million. Careful planning around the cliff is essential, particularly for estates with illiquid assets (like closely held businesses or real estate) whose value can be difficult to control precisely.

**No portability.** The federal estate tax allows a surviving spouse to "port" the unused exemption of their deceased spouse. New York does not. This makes NY-specific trust planning — particularly Credit Shelter Trusts (also called Bypass Trusts) — important for married couples seeking to preserve both exemptions.

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Federal Estate Tax: The 2026 Sunset

The Tax Cuts and Jobs Act of 2017 roughly doubled the federal estate and gift tax exemption. Under current law, those higher exemptions expire on December 31, 2025. Beginning January 1, 2026, the exemption is expected to revert to approximately $7 million per person (adjusted for inflation), cutting the available shelter nearly in half.

For married couples, this means up to $14 million in combined federal exemption could be lost if no action is taken. Gifts made before the sunset date — and properly structured — lock in the higher exemption even if the law changes afterward. The IRS confirmed in 2019 that pre-sunset gifts will not be subject to "clawback" when the exemption drops.

The window is closing. Families with estates above $7 million per person should be having this conversation now.

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Common Estate Tax Planning Strategies

**Annual Gifting.** Every year, you can give up to $19,000 (2025) per recipient free of gift tax and without touching your lifetime exemption. Couples can give $38,000 per recipient. Over a decade, systematic gifting to children and grandchildren can remove millions from a taxable estate — at no cost in tax today.

**Irrevocable Life Insurance Trust (ILIT).** Life insurance death benefits are included in your estate if you own the policy. An ILIT owns the policy instead, keeping the proceeds out of your estate. The trust can use the proceeds to pay estate taxes or provide liquidity to heirs — without adding to the taxable estate.

**Spousal Lifetime Access Trust (SLAT).** A SLAT allows one spouse to gift assets into an irrevocable trust for the benefit of the other spouse (and children), removing the assets from the taxable estate while the donor spouse retains indirect access through the beneficiary spouse. SLATs are particularly useful before the 2026 exemption sunset.

**Qualified Personal Residence Trust (QPRT).** A QPRT transfers your home into a trust for a set term, during which you retain the right to live there. At the end of the term, ownership passes to your heirs at a reduced taxable value (discounted for the retained interest). QPRTs can produce significant estate tax savings for high-value real estate.

**Grantor Retained Annuity Trust (GRAT).** A GRAT transfers investment assets into a trust while you receive annuity payments for a set term. If the investments outperform the IRS hurdle rate, the excess passes to heirs tax-free. GRATs work particularly well in low-interest-rate environments or with assets expected to appreciate rapidly.

**Charitable Strategies.** Charitable Remainder Trusts (CRTs) and Charitable Lead Annuity Trusts (CLATs) can reduce estate taxes while supporting causes you care about. Qualified Opportunity Zone investments and conservation easements may also provide both tax benefits and meaningful impact.

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New York vs. New Jersey Estate Tax

New Jersey eliminated its estate tax in 2018. NJ residents are no longer subject to state-level estate tax — but New Jersey does impose an inheritance tax on transfers to non-immediate-family members (at rates up to 16%). Planning for NJ clients focuses primarily on federal exposure and, where applicable, the inheritance tax.

NY and NJ domicile can also be contested. If you split time between states, establishing clear domicile in the more favorable jurisdiction — before death — can be consequential.

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When to Start Estate Tax Planning

The honest answer is: now. Strategies like QPRTs require you to outlive the trust term. ILITs require time to build up value. GRATs work best during periods of low interest rates. And with the federal exemption sunset approaching, every month of delay narrows the window.

Even if your estate is below the threshold today, appreciation in real estate, business interests, and investment portfolios can push you over the line faster than most families expect. Estate plans should be reviewed any time your net worth increases materially, your family situation changes, or major tax law changes occur — such as the one arriving January 1, 2026.

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