As the 2026 sunset of the federal estate tax exemption approaches, Long Island estate planning attorney Seth Schlessel (https://www.schlessellaw.com/estate-tax-exemption-sunset-2026/) from Schlessel Law PLLC advises New York residents to reassess their estate planning strategies. The scheduled reduction in the federal estate tax exemption could lead to significant tax liabilities for many estates that were previously exempt under the current laws.
In 2026, the federal estate tax exemption is set to revert to its pre-2018 levels due to the expiration of the Tax Cuts and Jobs Act (TCJA) of 2017. This change will have a profound impact on estate planning, particularly for New York residents who may find themselves newly subject to both federal and state estate taxes. Seth Schlessel, an experienced Long Island estate planning attorney, emphasizes the importance of understanding these impending changes and taking proactive steps to protect one's estate.
Long Island estate planning attorney Seth Schlessel explains that under the current law, the federal estate tax exemption is approximately $13.61 million per individual. However, when the TCJA provisions sunset in 2026, this exemption will be significantly reduced, potentially exposing many estates to federal estate taxes. "Many individuals who were previously shielded from federal estate taxes will now need to reconsider their estate plans to avoid unexpected tax burdens," says Schlessel.
The situation is further complicated by New York's unique estate tax structure, which includes a "cliff" provision. This provision means that if the value of an estate exceeds 105% of the New York estate tax exemption—currently set at $6.94 million—the entire estate becomes subject to state estate tax, not just the amount over the exemption. Seth Schlessel, a Long Island estate planning attorney, highlights the importance of understanding both federal and state tax thresholds to avoid unanticipated tax liabilities. "The interaction between federal and New York state tax laws can lead to significant tax obligations for estates that slightly exceed the exemption limits," he notes.
With the anticipated reduction in the federal estate tax exemption, more New York estates could become liable for both federal and state estate taxes. This shift underscores the need for careful and strategic estate planning. According to Long Island estate planning attorney Seth Schlessel, New Yorkers should consider revisiting their estate plans and implementing strategies such as lifetime gifting and the use of trusts to minimize tax liabilities. "Adapting estate plans to align with the changing tax landscape is crucial to preserving wealth and ensuring that one's financial legacy is protected," advises Schlessel.
To illustrate the potential impact of these changes, Seth Schlessel provides several examples of how New York estates might be affected. For instance, an estate valued at $10 million would be subject to New York state estate tax on the entire amount if it exceeds the state exemption limit, despite being below the current federal exemption. In contrast, an estate valued at $15 million would face taxes at both the state and federal levels, highlighting the need for strategic planning to mitigate tax liabilities.
Proactive financial tactics, such as annual gifting and the use of Irrevocable Life Insurance Trusts (ILITs), are also recommended by Seth Schlessel. These strategies can help reduce the size of a taxable estate and provide tax-free funds for beneficiaries to cover estate taxes and other expenses. "By taking advantage of the current gift tax exclusions and implementing trusts, New Yorkers can effectively minimize their estate's exposure to future tax liabilities," advises Schlessel.
The upcoming changes in estate tax laws present significant challenges, but with careful planning and professional guidance, New York residents can take steps to mitigate potential tax burdens and secure their family's financial future. Long Island estate planning attorney Seth Schlessel is committed to helping clients prepare for the 2026 estate tax exemption sunset and beyond.
About Schlessel Law PLLC:
Schlessel Law PLLC is a Long Island-based law firm well-versed in estate planning, elder law, and probate matters. Led by experienced attorney Seth Schlessel, the firm is dedicated to providing clients with comprehensive legal services tailored to their unique needs. Schlessel Law PLLC takes a proactive approach to estate planning, helping clients navigate complex tax laws and safeguard their financial legacies.
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