This article reprint was recently published in Steve Leimberg’s Estate Planning Newsletter.

  • A New York court has found that a QTIP Trust, created for New York purposes in 2010 when the estate was not subject to federal estate tax, was not includable in the estate of the surviving spouse for New York estate tax purposes. See a discussion of that case in Steve Leimberg’s Estate Planning Newsletter #2676.
  • Not surprisingly, a proposal to change the result in the case is contained in the proposed 2019-2020 New York Executive Budget, issued on January 15, 2019.
  • However, the proposed change would apply prospectively only, to estates of individuals dying on or after April 1, 2019.

This means there should still be a window of opportunity if a QTIP trust was created in the estate of a first spouse to die and no federal return was filed, either because the first spouse died in 2010 or because the value of the first spouse’s estate was under the federal filing threshold.

Other states with a comparable statutory framework might have a similar result.

Also on the transfer tax front, the proposed 2019-2020 Executive Budget includes a proposal to extend the New York three-year gift add-back retroactively from Jan 1, 2019 (when it lapsed) until Jan. 1, 2026.

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Please see important disclosures at the end of the article.


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