Tax planning is part of every well-drafted estate plan. The goal is not to file forms before a deadline but to arrange what you own, and how it passes, so that estate, gift and generation-skipping transfer taxes take as little as possible from what you leave. In this article we outline the tax questions an estate plan should answer.
1. Know where you stand against the exemptions: For 2026 the federal estate and gift tax exemption is $15 million per person, indexed for inflation, with no scheduled sunset. New York's basic exclusion amount is $7,350,000 for 2026, and New York allows no portability of a deceased spouse's unused exclusion. An estate plan should begin with a realistic estimate of where your estate falls against both figures (see our New York Numbers page for the current figures).
2. Watch the New York cliff: If a New York taxable estate exceeds the exclusion by more than 5% ($7,717,500 for 2026), the credit disappears and the entire estate is taxed, not just the excess. Charitable bequests, credit-shelter planning and lifetime gifts can keep an estate below the line.
3. Use lifetime gifts carefully: New York has no gift tax, but taxable gifts made within three years of death are added back to the New York gross estate (Tax Law 954, for deaths before January 1, 2032). Gifts within the federal annual exclusion (the 2026 figure is $19,000 per recipient) and direct payments of tuition and medical expenses are generally not taxable gifts.
4. Plan for married couples: The marital deduction defers tax until the second death, but relying on it alone can waste the first spouse's New York exclusion. Credit-shelter and QTIP trusts can preserve both spouses' exclusions, and where a spouse is not a U.S. citizen a qualified domestic trust (QDOT) is generally needed for the marital deduction.
5. Consider the generation-skipping transfer tax: Gifts and bequests to grandchildren, or to trusts that may benefit them, can attract a separate federal GST tax; allocating GST exemption correctly matters for any trust intended to last more than one generation.
6. Think about income-tax basis: Assets owned at death generally receive a stepped-up income-tax basis, while gifted assets generally carry over the donor's basis. Which assets to give during life and which to hold until death is a tax decision in its own right.
7. Plan for charitable giving: Charitable bequests reduce the taxable estate and can bring a New York estate below the cliff; lifetime gifts of appreciated assets can also avoid capital gains tax.
8. Coordinate with your advisors: We work with your accountant and other advisors so that the estate plan, your income-tax picture and your beneficiary designations point the same way.
At Schwartsman Law Group, we handle the tax side of estate planning: estate, gift and generation-skipping transfer tax, and the New York estate tax cliff. Contact us to review how your plan measures up.
