New York Estate Planning & Elder Law Blog
PROBATE IS UNAVOIDABLE
It is a fact of life that we can never plan for the worse case scenario and there is always risk in anything you do. The law recognizes this special risk, at least in part, in wrongful death lawsuits. In order for a wrongful death action to proceed, a party must apply to the Surrogate’s Court to act as the personal representative of the estate. In essence, that person must stand in the shoes of the deceased for purposes of the wrongful death action. Any and all settlement or award monies must pass through the probated estate under the jurisdiction of the Surrogate’s Court. This can present special issues if you already have a will, but no trust or other legal device to bypass the probate process and your estate is close to the estate tax exemption threshold. The federal estate tax exemption is currently set at $5.45 million dollars.
Anything above the Federal exemption is taxed at a heavy 40 percent. New York’s estate tax exemptions are changing and will continue to change until 2019 when it will match the Federal government’s exemption amounts. After 2019 there is an added problem with New York’s estate tax exemption; specifically, if the entirety of the estate exceeds the exemption amount by five percent, the entirety of the exemption is forfeited and the entire estate is taxed. That means that if your estate is say, for example, 120 percent of the exemption amount, the entirety of your estate will be taxed under New York rates. At the same time, 20 percent of your estate will be taxed at 40 percent. It is important to note the difference between the exemption amount and the taxable rate.