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Our firm has opened a satellite office in New York City. It is located at 1180 Avenue of the Americas, 8th Floor, New York, NY 10036. Our main phone and fax numbers at the main office in Willowbrook, New Jersey should be utilized. Nonetheless, this new location will accommodate our clients in the greater New York area and is conveniently located just under Rockefeller Center on 6th Avenue. We look forward to accommodating your needs at this location, if necessary.

New York Estate Tax Changes!

Our firm has a very active estate planning business in New York, especially New York City, and we recently opened a New York office. We thought it would be helpful for our clients to understand that New York has followed a large trend among the States to reduce estate taxation levels and overhauled its estate tax laws effective April 1, 2014, more than doubling its previous estate tax exemption of $1 million. The new exemption will now rise gradually each fiscal year through 2019 when it is set to match the generous federal exemption, which was originally set at $5 million but increases each year based on inflation adjustments and is projected to be almost $6 million in 2019. The top estate tax rate in New York remains at 16% under the new law.

On one hand, the increased estate tax exemption will make planning much easier for a lot of people, but there is a new, rather large, surprising trap in the new law which requires careful planning.

New York’s new exemption schedule is as follows:

  • For deaths as of April 1, 2014 and before April 1, 2015, the exemption is $2,062,500.
  • For deaths as of April 1, 2015 and before April 1, 2016, the exemption increases to $3,125,000.
  • For deaths as of April 1, 2016 and before April 1, 2017, the exemption increases to $4,187,500.
  • For deaths as of April 1, 2017 and before January 1, 2019, the exemption is $5,250,000.

Thus, in effect, the estate tax exemption increases by $1.0625 million on April 1st of each year until 2017, when it reaches $5.25 million. These increases will allow far more assets to flow from a decedent’s estate to his or her beneficiaries free from estate taxation.

New York’s estate tax is applied in a unique manner. Under the taxation schemes of other states, as well as that of the federal government, once an estate is subject to the tax, only the amount that is over the exemption amount is subject to the tax. For example, if the estate tax exemption is set at fiscal year 2015’s $3.125 million and an estate is valued at $4.15 million, only the $1 million amount over the $3.125 million exemption standard would be subject to the estate tax. New York, however, taxes the entire amount of the estate once the estate is valued at an amount just 5% over the exemption limit. Estates thus face a cliff if their values exceed 5% of the exemption because New York will then tax the full value of the estate, not just the amount over the exemption like other states.

In addition to the tax cliff, New York, unlike New Jersey and the federal government, does not allow for portability whereby a surviving spouse can shelter twice as much without the use of technical trust provisions by using each spouse’s exemption amount. This aspect of New York’s law makes estate planning critical in and of itself!

When calculating the value of an estate, executors must include the value of money in bank and investment accounts, certificates of deposit, real estate, vehicles, personal belongings (e.g., jewelry, furniture), life insurance proceeds of policies owned at death, retirement accounts, and business interests.

If you’re a client and feel you want to take maximum advantage of estate taxation laws considering the New York law which became effective April 1, 2014, please call our offices to further discuss your planning options.

NEW Satellite Office: Rockaway, NJ

We are proud to announce the opening of our new satellite office located at 20 West Main Street, Rockaway, New Jersey 07866.  We will now not only have the capability of meeting with our Tax, Trusts and Estates clients at this location, we will also be servicing the real estate needs of our clients.  Our real estate paralegal, Jennifer Palermo, will be working exclusively with AnnMarie Palermo-Smits to take care of our clients’ residential and commercial closing needs as well as any leasing needs.

Rockaway Office Building

Managing Member Quoted in NY Times

In an article posted in the Real Estate section of the New York Times on June 28, 2013 and written by Constance Rosenblum titled “Mom and Dad, Let’s Talk Real Estate,” Managing Member, AnnMarie Palermo-Smits was quoted discussing what it’s like dealing with elder fraud up close and personal. Read a section of the article below.

Beware of Fraud

A world in which people are living longer offers greater opportunity for what is called elder fraud, and such fraud easily spills over into real estate decisions.

AnnMarie Palermo-Smits, a lawyer who specializes in estate planning, has seen elder fraud up close. She recalls the case of a client, a once-famous and still striking ballerina in her mid-70s. “She looked like a former dancer,” Ms. Palermo-Smits said. “She was slim and she wore only black.”

The woman had lived for decades in a white-glove condominium in the East 60’s, in a balconied apartment worth $850,000. Her husband had died, there were no children, and she was alone but for a sibling on Long Island.

“The trouble began when a woman in the building befriended her, tried to buy her apartment for well below what it was worth, and somehow became the co-executor of her will,” said Ms. Palermo-Smits, who is the chairwoman of the tax, trusts and estates department of Wells, Jaworski & Liebman, a firm in Paramus, N.J. “But once the contract was drawn up, we discovered that the so-called friend had serious legal problems. We also discovered that this ‘friend’ had tried to do the same thing with other people in the building.

“You try to do everything right, but how do you prevent people like this from charging down the wrong path?” Ms. Palermo-Smits said. “My client was vulnerable because she was old, lonely and pretty much alone.”

Her advice? “Always get independent legal counsel. Beware of outside influences. Most of all, beware of newfound friends.”

Article originally published in the New York Times Real Estate section on June 28, 2013.

Written by Constance Rosenblum. Click here to read the entire article.