Along with the District of Columbia, New York is one of the 12 states that tax the estates of deceased people who either lived there or held property there. In addition to this, a number of additional criteria, starting with whether or not you have a legal will, affect how the state manages inheritances. If you are for info about inheritance law in New York then you are on the right page. In this article, Eastcoastlaws.com will outline all you need to know about Inheritance laws in the State of New York.
New York Inheritance Tax or Estate Tax
New York State has both an inheritance tax (laws) and an estate tax. The inheritance tax is imposed on the recipients of an inheritance, and the rate varies based on the relationship of the recipient to the deceased person. The estate tax is imposed on the value of the deceased person’s estate before it is distributed to the beneficiaries, and the rate varies based on the value of the estate. The estate tax applies to estates with a value of over $5,850,000 in 2021. Both taxes are separate from federal estate taxes.
Does New York Have An Inheritance Tax or Estate Tax?
New York has an estate tax even though it doesn’t impose an inheritance tax (laws). If the decedent’s estate exceeds the $6.11 million estate tax exemption allowed by the state, the estate must submit a New York estate tax report. Although there are options for extensions, the state government stipulates that they must be filed within nine months of the decedent’s passing. Your potential tax rate might be as high as 16%.
New York inheritance rules require the filing of an estate tax return if the entire amount of the estate exceeds the aforementioned exemption. However, only the value of their property in New York is taxed for individuals who only own real estate there but aren’t inhabitants.
Other Necessary Tax Filings
The New York estate tax is in addition to the federal estate tax, which must be paid within nine months of a person’s passing for estates totaling more than $12.06 million ($24.12 million for couples) in gross assets plus past taxable gifts. Only estates with a value greater than the aforementioned exemption are subject to the federal estate tax. If you ask for this before the due date, you will automatically receive a six-month extension. A last individual state and final individual federal income tax return must be submitted by the tax day of the year after the individual’s death to the federal and New York state governments, respectively. Additionally, a federal estate/trust income tax return needs to be filed. Make sure to file by April 15 of the year following the person’s passing for this.
The IRS demands that an estate has its own employer identification number (EIN) to represent itself in any tax-related matters. To apply for an EIN, visit the IRS website or apply by fax or mail.
How Estate Property Is Categorized in New York Inheritance Law
In New York, estate property is categorized into two main categories: separate property and marital property.
Separate property is property that is owned solely by one spouse and is not subject to distribution during a divorce or upon the death of a spouse. This includes property that was acquired before the marriage, property that was acquired by gift or inheritance during the marriage, and property that was acquired after a legal separation agreement was signed.
Marital property, on the other hand, is a property that is acquired during the marriage and is subject to distribution during a divorce or upon the death of a spouse. This includes property that is acquired by either spouse during the marriage, regardless of whose name is on the title or deed.
In the context of inheritance law, the heirs of the deceased will receive the property according to the deceased’s will or the legal rules of intestacy if there is no will. The heirs will receive the property as separate or marital property depending on how the property was acquired and owned before the death.
It is worth noting that New York State has abolished the inheritance tax on property passed to a surviving spouse, children, grandchildren, parents, grandparents, and certain other close relatives, so the property passed to these individuals will not be subject to inheritance tax.
Dying With A Will In New York
Dying with a will in New York state is a process that involves creating a legal document that outlines how a person’s assets will be distributed upon their death. This document is commonly referred to as a last will and testament.
The process of creating a will in New York begins with the testator, or the person creating the will, deciding how they want their assets to be distributed. They must also appoint an executor, who is responsible for carrying out the instructions outlined in the will. The testator must also name beneficiaries or the individuals or organizations that will receive the assets outlined in the will.
Once the testator has determined the distribution of their assets and appointed an executor and beneficiaries, the will must be written and signed. In New York, a will must be in writing and signed by the testator and two witnesses. The witnesses must be present when the testator signs the will and cannot be beneficiaries named in the will. It is important to note that there are certain assets that are not controlled by a will. These include assets that have a designated beneficiary, such as life insurance policies or retirement accounts. These assets will pass directly to the designated beneficiary, regardless of what is outlined in the will.
Once the testator has passed away, the will must be filed with the Surrogate’s Court in the county where the testator resided at the time of their death. The executor named in the will must submit the will to the court and prove that the testator was of sound mind and not under duress when the will was created. The executor is then responsible for carrying out the instructions outlined in the will, which includes distributing assets to the named beneficiaries. This process can be complex and time-consuming, and it is important for the executor to seek legal guidance if they are unsure about their responsibilities.
It is important to note that a will can be challenged in court. This can occur if a beneficiary believes that the will is not valid or if they believe that they were unfairly left out of the will. If a will is challenged, the court will determine its validity and make a ruling on its distribution of assets.
Dying Without A Will In New York
Dying without a will, also known as dying intestate, can have significant consequences for your loved ones in the state of New York. When a person dies without a will, their assets are distributed according to state laws rather than their own wishes.
In New York, if an individual dies without a will, their assets will be distributed to their surviving spouse and children. If the deceased person has no surviving spouse or children, the assets will be distributed to their surviving parents. If there are no surviving parents, the assets will be distributed to the deceased person’s siblings. If there are no surviving siblings, the assets will be distributed to the deceased person’s grandparents or their descendants. If there are no surviving grandparents or descendants, the assets will be distributed to the deceased person’s aunts and uncles or their descendants. If there are no surviving aunts, uncles, or descendants, the assets will be distributed to the deceased person’s first cousins.
However, if the deceased person has no surviving relatives, the assets will be distributed to the state. This means that the state will inherit the assets of the deceased person rather than them going to any friends or charitable organizations that the deceased person may have wanted to benefit.
Furthermore, not having a will can make the probate process more complicated and time-consuming. The probate process is the legal process of distributing a deceased person’s assets to their heirs. Without a will, the court will have to determine who the legal heirs are, which can be a long and difficult process. Additionally, the probate process can be costly, as there are legal and administrative fees associated with it.
In addition, without a will, the surviving family members or beneficiaries may have to go through a legal process to be appointed as administrators of the estate. This can be a costly and time-consuming process, and it can also lead to disputes among family members over who should be appointed as the administrator.
Spouses In New York Inheritance Law
When a person dies without a will, their surviving spouse is entitled to a share of their estate. The specific share that the spouse is entitled to depend on whether or not the deceased person had any children.
If the deceased person had children, the surviving spouse is entitled to the first $50,000 of the estate and one-half of the balance. For example, if the estate is worth $200,000, the surviving spouse would be entitled to the first $50,000 and half of the remaining $150,000, for a total of $100,000.
If the deceased person did not have any children, the surviving spouse is entitled to the first $50,000 of the estate and three-quarters of the balance. For example, if the estate is worth $200,000, the surviving spouse would be entitled to the first $50,000 and three-quarters of the remaining $150,000, for a total of $137,500.
It’s worth noting that if the deceased person had children from a previous relationship, the surviving spouse’s share of the estate may be reduced. In such cases, the children would be entitled to a share of the estate as well.
Under New York law, the surviving spouse has the right to elect against the will, which means that they can choose to receive their statutory share of the estate instead of any provision that was made for them in the will. It’s important to consult with an attorney to understand the inheritance laws in New York to ensure that the spouse’s rights are protected and that the distribution of the estate is done in accordance with the law.
Children In New York Inheritance Law
In New York, when a person dies without a will, their children are also entitled to a share of their estate. The specific share that the children are entitled to depend on whether or not the deceased person had a surviving spouse.
If the deceased person had a surviving spouse, the children are entitled to a share of the estate along with the surviving spouse. In this case, the children would be entitled to half of the estate if there are children from the surviving spouse and the deceased person, and if there are no children from the surviving spouse, the children would be entitled to the whole estate.
If the deceased person did not have a surviving spouse, the children are entitled to the entire estate.
It’s worth noting that if the deceased person had children from multiple relationships, the share of the estate that each child is entitled to may be different. In such cases, the court would need to determine the appropriate distribution of the estate among the children.
Additionally, under New York law, if a child is under 18 years of age at the time of the deceased person’s death, they are considered to be a minor and a guardian will need to be appointed to manage their share of the estate until they reach the age of majority.
Grandchildren’s Inheritance Rights In New York
Only if your child (your grandchild’s parent) passed away before you would New York grant your grandchildren any property rights through intestate succession. If your child is still living when you pass away, they will get your property instead of your grandchild. Of course, if you like, you can avoid any issues by designating your grandkids as the heirs to a particular property in your will.
Unmarried Individuals Without Children In New York Inheritance Law
In the event that neither a spouse nor children survive you after you pass away, your parents will inherit the assets in your estate. However, in the event that your parents pass away before you do, your siblings will equally divide your wealth under New York inheritance laws. If none of the heirs mentioned above survives you, your wealth will be divided equally between your paternal and maternal grandparents, if any survive. However, if neither of your grandparents survives you, your aunts and uncles will be in charge of your fortune, which will once more be divided equally between your paternal and maternal families. In both cases, if only one side has heirs who survive you, the entire estate will belong to them.
Your nieces and nephews will potentially inherit your estate as a last resort. This will once more be split equally between the two sides, with the entire estate going to one side if neither side has any living nieces or nephews.
Non-Probate New York Inheritances
There are certain assets that do not go through the probate process and are not subject to the laws of intestate succession when a person dies without a will. These are referred to as non-probate assets and include:
- Assets that are owned jointly with right of survivorship: If a person owns an asset, such as a bank account or real estate, jointly with another person and it is titled with “right of survivorship,” the surviving joint owner automatically becomes the sole owner of the asset upon the death of the other owner.
- Assets held in a trust: If a person has transferred assets into a trust, these assets will not be subject to probate and will be distributed according to the terms of the trust.
- Life insurance policies: If a person has a life insurance policy, the death benefit will be paid to the named beneficiary, regardless of the terms of a will or the laws of intestate succession.
- Retirement accounts: If a person has a retirement account, such as a 401(k) or an IRA, the funds in the account will be distributed to the named beneficiary, regardless of the terms of a will or the laws of intestate succession.
- Payable-on-death or transfer-on-death accounts: If a person has designated a beneficiary on a bank account or securities account, the funds in the account will be transferred to the designated beneficiary upon the person’s death, regardless of the terms of a will or the laws of intestate succession.
It’s important to note that non-probate assets may still be subject to taxes and creditors’ claims, and it’s recommended that you consult with an attorney for proper estate planning.
How Long Do You Have To Claim An Inheritance In NY?
There is no specific statute of limitations for claiming an inheritance. The time frame for claiming an inheritance can vary depending on the circumstances of the case. If the deceased person had a will and the estate is going through probate, the executor of the estate is responsible for notifying potential beneficiaries of the probate proceedings. Beneficiaries typically have the right to contest the will within a certain period of time, which is usually four months from the date of the first publication of the notice to creditors.
If the deceased person did not have a will and the estate is going through intestate succession, the administrator of the estate is responsible for notifying potential heirs of the intestate proceedings. Heirs typically have the right to contest the distribution of the estate within a certain period of time, which is usually four months from the date of the first publication of the notice to creditors.
However, it’s important to note that even if a beneficiary or heir does not contest the will or the distribution of the estate within this time frame, they may still be able to claim their inheritance at a later date.
In the case of non-probate assets, the time frame for claiming an inheritance can vary depending on the type of asset and the terms of the account. For example, in the case of a life insurance policy, the beneficiary has to file a claim with the insurance company within a certain period of time, usually one year from the date of the policyholder’s death.
It’s recommended that you consult with an attorney to understand the specific time frame for claiming an inheritance in your case and to ensure that your rights are protected.